Filing your UK tax return accurately is key to maximizing your tax refund and avoiding unnecessary delays. Many taxpayers inadvertently reduce their refunds by making common mistakes that could have been easily avoided with proper preparation and knowledge. This comprehensive guide outlines the most frequent errors and provides actionable tips to ensure you get every penny you’re entitled to from HMRC.
1. Failing to Claim All Eligible Tax Reliefs and Allowances
One of the biggest mistakes taxpayers make is neglecting to claim all the tax reliefs and allowances available to them. This includes reliefs for pension contributions, Gift Aid donations, marriage allowance transfers, and work-related expenses. Remember to check if you’re eligible for the Blind Person’s Allowance or relief on investment losses. Not claiming these can significantly reduce your refund.
2. Incorrect or Incomplete Information
Providing incorrect or incomplete information on your tax return is a surefire way to trigger HMRC delays and reduce your refund. Double-check your National Insurance number, UTR (Unique Taxpayer Reference), and bank details. Also, ensure that all sources of income—including salary, dividends, rental income, and foreign income—are reported correctly.
3. Overlooking Employment Expenses
If you incur expenses in the course of your employment—such as uniforms, tools, or travel costs—make sure to claim these on your return. Many taxpayers miss out on refunds simply because they forget to include these deductions. Keep receipts and records to support your claims, as HMRC may ask for evidence.
4. Forgetting to Report All Sources of Income
Many taxpayers forget to include small or occasional income sources like interest on savings, dividends, or side hustles. Failing to declare all income can lead to HMRC raising queries or even imposing penalties, which can offset any refund you might have been expecting. Even if tax was deducted at source, it’s essential to include it in your return.
5. Not Using the Right Tax Code
Using the wrong tax code can affect the amount of tax you’ve paid during the year and ultimately impact your refund. If your tax code is incorrect, you might be paying too much or too little tax. Always check your PAYE Coding Notice and make sure it reflects your current circumstances, including any second jobs or benefits-in-kind.
6. Ignoring Capital Gains Tax (CGT) Allowances
If you’ve sold assets like shares, property, or even certain cryptocurrencies, you may have a capital gains tax liability. Many taxpayers forget to consider the Annual Exempt Amount for CGT, which could reduce the amount of tax payable. Not using this allowance properly can lead to overpayment and a lower refund overall.
7. Missing Deadlines
Late submissions of your tax return or payments can result in penalties and interest charges, which can eat into your expected refund. The deadline for online Self Assessment tax returns is 31 January following the tax year, and for paper returns, it’s 31 October. Set reminders and file on time to avoid unnecessary charges.
8. Misreporting Pensions and Other Reliefs
Pension contributions can provide valuable tax relief, but they must be reported correctly. Contributions to private pensions should be entered accurately on your return to ensure you receive the higher-rate relief if you’re eligible. Likewise, other reliefs—like EIS (Enterprise Investment Scheme) or SEIS (Seed Enterprise Investment Scheme) reliefs—require proper documentation and reporting to be applied correctly.
9. Forgetting to Claim for Gift Aid Donations
Charitable donations can significantly reduce your taxable income through Gift Aid. If you’re a higher or additional rate taxpayer, you can claim back the difference between the basic rate and your rate of tax on your donation. Make sure to include all eligible donations in your tax return to get the maximum relief.
10. Not Keeping Proper Records
Poor record-keeping is a common reason for errors and missed refunds. Keep all receipts, payslips, P60s, P45s, bank statements, dividend vouchers, and other relevant documents. This not only helps you complete your return accurately but also provides support if HMRC requests evidence for any claims you make.
Conclusion
Maximizing your UK tax refund starts with understanding the most common mistakes that reduce your entitlement. By claiming all relevant allowances, reporting accurate information, keeping meticulous records, and filing on time, you can avoid unnecessary errors and make sure you get the refund you deserve. If you’re unsure about any aspect of your tax return, consider consulting a tax professional or using reliable tax software to assist you in completing your Self Assessment correctly.
