Key Considerations for UK Taxpayers Completing Their 2024 Self-Assessment  

As the 31st January deadline for the UK Self-Assessment tax return approaches, it’s crucial to ensure you avoid common pitfalls. Completing your tax return is straightforward, but errors, omissions, and misunderstandings can result in hefty penalties or overpaying on your tax bill. Before you submit your self assessment check through the following:

1. Double-Check Your Taxable Income  

One of the most common mistakes taxpayers make is failing to include all forms of taxable income. Remember, Self-Assessment is not just about reporting your earnings from employment or self-employment. You need to declare income from other sources, including:

–   Rental income from properties (after allowable deductions).

–   Interest on savings that exceeds your Personal Savings Allowance.

–   Dividends from shares that surpass your annual dividend allowance.

–   Foreign income, even if it was earned abroad, unless covered by a Double Taxation Agreement (DTA).

Neglecting to report all income could result in underpayment of tax, which carries penalties. In 2024, the HMRC continues to use sophisticated systems to match data from multiple sources, including banks and property records, so any undeclared income is likely to be flagged.

Tip : Review all bank accounts, investment portfolios, and rental agreements to ensure you’re including all relevant income.

2.   Understand the Latest Allowance Changes  

For the 2023/24 tax year, there have been key changes to tax allowances that will affect what you can claim:

• Personal Allowance (the amount you can earn before paying tax) remains frozen at £12,570, but if your earnings exceed £100,000, this allowance starts to taper off.
• Dividend Allowance   has been reduced to £1,000 (previously £2,000). If you earn dividends, this change could push you into paying more tax on this income.
• Capital Gains Tax (CGT) annual exemption has dropped to £6,000, down from £12,300. This affects those selling assets like shares, property (other than your primary residence), or other investments. If you’ve made a capital gain, make sure to calculate whether your profit exceeds this lower threshold.

Tip  : Check if you’re still within your reduced allowances and prepare to pay more tax if you’re over.

3. Be Clear on Expenses for Self-Employed and Freelancers  

Claiming expenses is a crucial part of reducing your tax bill if you’re self-employed or a freelancer. However, it’s important to ensure the expenses you claim are allowable by HMRC. These must be wholly and exclusively for business purposes. Common allowable expenses include:

• Office costs  : Rent, utility bills, and equipment like computers or phones.
• Travel  : Public transport costs or mileage if you use a personal vehicle for business purposes (within HMRC’s set rates).
• Marketing  : Costs related to promoting your business, including website hosting or advertising.
• Professional fees : Accountancy or legal services.

If you work from home, you can claim a portion of your home running costs, such as utility bills, under simplified or detailed methods, depending on your situation. Be cautious when claiming personal expenses (such as meals or travel unrelated to work), as these could be disallowed.

Tip: Keep meticulous records of all business expenses and receipts throughout the year to avoid scrambling at the last minute.

4. Watch Out for Late Filing and Payment Penalties  

HMRC takes late filings seriously, and missing the 31st January deadline can result in immediate fines. Here’s the penalty structure:

• £100 fixed penalty  for missing the deadline, even if no tax is owed.
• An additional £10 per day   for up to 90 days if the return is three months late.
• After six months, a  further £300 or 5% of the tax due (whichever is greater) is added.

Additionally, if you fail to pay your tax on time, you’ll face interest on the outstanding amount, plus further penalties. As of 2024, HMRC’s interest rate on unpaid taxes is 7.75%, following several increases due to rising base interest rates.

Tip  : Aim to file early to avoid system issues or last-minute panics. Even if you file your return but cannot pay the full tax owed, contact HMRC to discuss a   Time to Pay arrangement   and avoid unnecessary penalties.

 5. Claim All Relevant Reliefs and Allowances  

There are several reliefs and allowances available that can reduce your tax bill. Make sure you’re taking advantage of the ones relevant to your situation:

• Marriage Allowance: If one spouse or partner earns below the Personal Allowance (£12,570) and the other is a basic-rate taxpayer, you can transfer up to £1,260 of unused personal allowance to your partner, reducing their tax bill.
• Pension Contributions : Contributions to a personal or workplace pension scheme attract tax relief. If you’re a higher-rate taxpayer, you may need to claim additional relief through your Self-Assessment.
• Gift Aid: Donations to charity can be claimed through your tax return, boosting your tax-free amount.
• Trading Allowance : If you have casual earnings from selling goods or freelance work that are below £1,000, you can benefit from this allowance and may not need to declare this income.

Tip : Review all potential reliefs available on the HMRC website or consult a tax advisor to make sure you’re claiming what you’re entitled to.

6.   Ensure You Have the Right Documentation  

One of the simplest ways to avoid mistakes is by ensuring you have all the necessary documentation before you begin your return. Important documents include:

• P60 and P45 forms : These summarise your earnings and tax paid through PAYE.
• P11D  : If you receive benefits from your employer, this form outlines taxable benefits.
• Bank statements and investment records: To account for savings interest and dividends.
• Invoices and receipts : For self-employed individuals to verify income and expenses.
• Foreign income details : If you have any income from abroad, ensure you have the appropriate documentation to declare this accurately.

Tip  : Start gathering these documents early, so you’re not caught off guard as the deadline approaches.

7.   Keep Records for the Required Time Period  

Even after you’ve submitted your Self-Assessment, HMRC can still audit your tax return. By law, you’re required to keep records of your income, expenses, and other relevant documents for at least five years after the submission deadline. Failing to provide these if requested by HMRC could lead to fines or further investigations.

Tip  : Organise your digital or paper records clearly so that, if audited, you can produce the required evidence quickly and accurately.

8.  Seek Professional Help If You’re Unsure  

If your tax situation is complex, involving foreign income, multiple streams of earnings, or large investments, it’s a good idea to consult a professional accountant or tax advisor. Tax laws can be complicated, and professionals will ensure you stay compliant while also minimising your tax bill where possible.

Tip  : Find a qualified accountant who specialises in your area of need, whether that’s self-employment, property, or foreign income.

Completing your Self-Assessment tax return for 2024 doesn’t have to be stressful, but it does require careful attention to detail. Avoid common mistakes by ensuring you report all taxable income, claim the appropriate allowances, and file on time. With the potential penalties for mistakes or late submissions, it’s well worth the effort to double-check your return before hitting “submit.”

If in doubt, seek professional advice or use HMRC’s helpline to ensure you get it right. Stay informed, stay organised, and you’ll navigate this year’s Self-Assessment with ease.