Why care small tax errors...
Small tax errors might seem harmless, but they can lead to big headaches. These little mistakes on your tax return can trigger HMRC's attention and potentially lead to penalties.
With HMRC's increasingly sophisticated systems, even minor discrepancies get flagged. What looks like an innocent oversight to you might appear suspicious to the tax office.
Most people don't realise how these small mistakes can snowball into significant financial problems. Let's examine how to spot them before they cause trouble.
What exactly counts as a small tax error?
A small tax error is any mistake that affects how much tax you owe but wasn't made deliberately. Think of it as an honest slip-up rather than intentional tax avoidance.
These errors typically include incorrect figures, missed deadlines, or overlooked allowances and deductions you're entitled to claim. HMRC makes a clear distinction between careless errors and deliberate mistakes.
Even though they're called "small," these errors can cost you anywhere from a few pounds to several thousand, depending on your circumstances. Common places for small errors include self-assessment returns, expense claims, and reporting income from property or investments.
How can small errors on your tax return cost you money?
The most obvious hit comes from penalties. Late filing starts at £100 and grows the longer you leave it. Then there's interest, which HMRC charges on any unpaid tax from the original due date.
If HMRC decides your errors were careless, you could face penalties of up to 30% of the tax you owe. If they think it was deliberate, that jumps to 100%.
Missing allowable expenses means you're essentially volunteering to pay more tax than necessary. Several small errors can add up quickly, turning into a hefty sum before you know it.
What are the most common small tax errors to watch for?
Missing the self-assessment deadline (31st January) is probably the most frequent error. It's easy to put it off until it's too late. Forgetting to include all your income sources is another big one.
Business expense calculations trip up many self-employed people. Claiming too much or too little can both cause problems. Many taxpayers also miss out on pension contribution tax relief.
Property income and expenses often get reported incorrectly, especially by accidental landlords. Additionally, pay attention to your tax code on your payslip, as an incorrect code could mean you're paying the wrong amount of tax every month.
How can you spot errors before submitting your tax return?
Double-check all figures against your records. It sounds obvious, but many errors come from simple typos or misreading numbers. Look at last year's return as a comparison if something seems dramatically different.
Use HMRC's online calculators to verify your figures before submitting. They're free and can help catch basic mistakes. Think about life changes that might affect your tax position.
Give yourself plenty of time before the deadline. Rushing leads to mistakes, and last-minute panic is not your friend when dealing with tax. Check your bank statements against what you've reported to catch many income and expense errors.
What should you do if you discover you've made a tax error?
Don't panic, but don't ignore it either. Contact HMRC as soon as you spot a mistake they're much more lenient with people who come forward voluntarily.
For self-assessment errors, you can amend your return within 12 months of the original deadline. After that, you'll need to write to HMRC. Keep records of when and how you informed them about the error.
Be ready to pay any additional tax promptly. For complex situations, getting professional help might save you money in the long run. Remember that owning up to mistakes typically results in lower penalties.
How can you prevent small tax errors in the future?
Keep your financial records organised throughout the year, not just at tax time. A little regular maintenance saves hours of stress later. Set calendar reminders for important tax deadlines so they don't sneak up on you.
Consider using tax software that helps flag potential errors before you submit. Many options can make the process smoother. Review your tax position every few months rather than annually.
If your tax affairs become more complex, getting professional advice might be worth the investment. Stay informed about tax changes that might affect you, as rules change frequently.
Final Words
Small tax errors happen to everyone, but catching them early minimises their impact. Taking a proactive approach saves stress, time, and money. When tax feels overwhelming, having the right support makes all the difference.
I once missed claiming work-from-home expenses for an entire year, costing myself nearly £300 in unnecessary tax. That painful lesson taught me the importance of staying organised and informed.
Pie is the UK's first personal tax app designed specifically for working individuals. It combines bookkeeping, real-time tax calculations, and simplified returns in one place.
Unlike traditional tax solutions, Pie gives you ongoing visibility of your tax position throughout the year, not just at filing time. With timely expert advice built in, you're less likely to make those small errors that cause big problems.
