5 Common Tax Mistakes Birmingham Residents Make and How to Avoid Them
Managing taxes for a business, is itself a stressful task and staying compliant with all the tax regulations adds to the stress. Navigating through all the tax compliances, staying up to date with the regulations, understanding deductions and ensuring accuracy, while filing the taxes, can be a challenging task. Along with that, there can also be human error that can result in penalties, delays or even an enquiry from HMRC. But all these problems can be resolved with the help of expert guidance from a professional tax accountant in Birmingham. They will guide you through your mistakes and help you to rectify them in a timely manner. Hence, in this blog, we will talk about five most common mistakes people make while managing taxes and how to steer clear of them.
Five common tax mistakes Birmingham residence make while filing their tax returns
- Failing to keep accurate records
The first common mistake people make while organising their financial records is not filing them accurately. A penalty up to £3,000 may be charged for each failure to keep or to preserve adequate records. Missing receipts, bank statements or invoices carry significant errors and cause them to return while filing your taxes. In case HMRC requires proof of deductions or income, not having the right document can result in penalties or hefty fines. So, to maintain your financial records accurately you need a system that records them in a precise manner. You can use folders that can digitally organise your bank statements, important tax related documents and invoices without losing any financial data. You can invest in an accounting software that helps you track all your expenses and invoices in real time, all in one place. Along with that, you can also consult an expert tax accountant in Birmingham that can help you establish a simple process for managing and storing all your crucial data.
- Overlooking tax deductions and credits
The second common mistake by many Birmingham residents is not having the right knowledge about credits and tax deductions which they are eligible for. All this leads to overpayment of taxes, leading to loss of funds and overspending. Countries like the United Kingdom have different tax system regulations that allow you to have reliefs on pension contributions, charitable donations and even energy efficient home improvement that can help you save on taxes. Why this mistake you need to consult with the professional tax accountant in Birmingham. He will be the right person to tell you about the latest updates in the tax laws and can you show that you all claim all the eligible deductions. For instance, if you are a self employed individual, you can get credits on your expenses such as office supplies, travel or for establishing a home office. The right tax accountant can help you review your circumstances and will make sure that you maximize your savings without losing any money.
- Filing the wrong self assessment returns
The third common issue faced by self employed individuals is accounting for a newly established company while filing self assessments returns. People with extra income streams or one earning from many sources need to submit a self assessment tax return form. But, while filing this form, many people are make mistakes such as input of wrong figures, missing deadlines and misunderstanding tax brackets. This can lead to incurring fines or an enquiry from HMRC. To avoid this mistake, you need to carefully track other income sources including freelance work, investments and rental income. Also, make sure to keep yourself updated about the deadlines and summit the self assessment form before the due date. To avoid all the hassle of the paperwork, you can always hire a tax accountant in Birmingham that can help you in accurately filing your forms before the date while ensuring the right income is properly accounted for and only the right tax is paid.
- Not updating the right personal information
You can get many benefits as well as advantages due to personal circumstances such as if you are getting married, having a child or if you are buying a new home. Many of these cases, taxpayers forget to put the right information or life events leading to incorrect tax codes or under/over payment of taxes. During such scenarios, you need to inform HMRC about all the life changes as soon as possible. For example, updating your tax code ensures that you get the right time to pay the taxes or putting the right address can also help you in reductions. Still confused about your tax circumstances, then you can always hire a tax accountant in Birmingham that can provide you the right guidance and help you notify the relevant authorities. Along with that you can always keep a check on pay slips and ensure that your tax code is always correct throughout the year.
- Missing the right deadlines
Lastly, one of the costliest mistakes people make is missing the right tax payment deadline. Paying the taxes last minute can result in penalties, interest charges and thus leading to additional stress for the taxpayer. For instance if your deadline is 31st October for self assessment form then you need to quickly fill it to avoid any penalties. So, to avoid this mistake you need to set reminders well in advance before the deadline dates. And ensure that you have enough funds available to pay all your tax bills. But, if you are still facing difficulties to meet your tax obligations then speak to your tax consultant in Birmingham as soon as possible. They will arrange you a payment plan or offer you the right guidance to avoid future losses.
Conclusion
Tax filing shouldn’t be a huge task full of anxiety and confusion. But it should be done responsibly and accurately to save time and penalties. By keeping a tab on deadlines, filing the right tax and partnering with a reputable tax accountant in Birmingham, you can save the hassle. They can provide you with the right guidance, help you in proper preparation of tax returns in advance and help you in avoiding penalties. So, don’t rush things during this tax season and hire the best accountant in the city, thus leaving the complexities and hassle to the professionals.