As a limited company contractor it is up to you to let HMRC know your income for the financial year 2017/18 and pay the tax you owe. This is done through a self-assessment Tax Return.
Below are the mistakes people most commonly make when completing their Return and our tips on how you can avoid them.
Missing out on tax relief
Although Tax Returns are generally focused on calculating the tax you owe, make sure you remember to claim tax relief where you are eligible. These could include things like professional subscriptions, pension contributions or charitable donations.
Not declaring all your income
You must ensure that all your taxable income is declared on your Tax Return. It can be easy to miss details if you have a complex financial situation so make sure you give yourself plenty of time to complete the Return and give some extra thought to the sections asking for details of income.
Late or inaccurate filing
Statistics from HMRC show that 745,588 Tax Returns were filed late for the 2016/17 tax year. One of the biggest mistakes people make is leaving their tax Return until the last minute and being unable to complete it in time. Not only does delaying it’s completion leave you at risk of being unable to file it on time but also increases the chance of the wrong information being entered in a rush.
Giving yourself the time to complete the Return accurately makes it much more likely that it will be correct, although if you do make a mistake you can amend the Return within the first year of the January 31st filing deadline.
Deadlines:
Here are the deadlines you need to remember when completing your Tax Return:
Submitting online tax return – 31st January (midnight)
Paying tax – 31st January (midnight)
What are the penalties if you submit your Tax Return late?
There is an initial £100 penalty fee if your return is up to three months late. After three months this will increase the longer you leave it as detailed below:
- After three months, there are additional daily penalties of £10 a day, up to a maximum of £900.
- After six months, you could end up with a further penalty of 5% of the tax you owe or £300, whichever is more.
- After twelve months, there’s another 5% or £300 charge.
What are the penalties if you pay your tax bill late?
You will then face additional penalties of 5% of the tax unpaid at 30 days, six months and 12 months.
How can PayStream help?
If you are worried about your self-assessment Tax Return you can avoid all of these problems by signing up to our Personal Tax Service which will ensure that your Return is completed accurately and on time.
