Similar to any other business structure, self-employed individuals are not immune to fulfilling their tax obligation, regardless of how much authority, control, and autonomy they might have. However, it is noteworthy that making a mistake could leave you in a tight spot with HMRC. That is where the crucial question emerges: how to correct errors in a self-assessment tax return?
They accomplish it by filing a self-assessment tax return, the biggest and most significant tax filing of the year. Accordingly, it will not be out of the ordinary for you to commit some mistakes unknowingly and then file them.
We understand that mistakes can happen, whether due to miscalculations, missing income, incorrect deductions, or simply the strain of filing it since self-assessment tax return is a responsibility that self-employed individuals in the UK must fulfil annually.
While HMRC provides clear guidelines for correcting errors in a tax return after submitting it, this blog elaborates on them in a step-wise lucid way. Hence, understand the process of rectifying mistakes and ensure compliance with tax regulations to prevent needless penalties.
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How to correct errors in a self-assessment tax return?
The following steps outline the key steps in order for you to easily learn how to correct errors in a self-assessment tax return:
Identify errors in your tax return:
Before anything else, you must remain mindful of the reasons that led you to make errors in your self-assessment tax return so that you do not commit it again.
Errors in a self-assessment tax return can arise for various reasons, including:
Incorrect income declaration: This error surfaces when you have either underreported or overreported your income.
Wrong expenses claimed: When you have mistakenly included ineligible expenses.
Missed allowances and reliefs: it occurs when you have overlooked tax-deductible expenses or allowances.
Calculation mistakes: Mathematical errors in manual calculations, such as putting a decimal point in the wrong place.
Typing mistakes: It is possible that you might have made a typing mistake or wrongly spelt something.
Personal details errors: Incorrect taxpayer details, like you have changed your name, address, or UTR (Unique Taxpayer Reference) in the same year as your tax filing.
Missed details: It slipped your mind to add something significant, such as an invoice or some other income that was not taxed.
Moving further, it is worth pointing out here that once you spot any of the above-mentioned errors, you should also consider whether amending them will change your tax bill in any manner.
Now, for your clarity, it will solely depend on which details you are going to rectify. For instance, If you change your name or address, your overall tax bill will remain the same.
On the contrary, if you update an invoice or add a few extra lines of untaxed income, you will most likely see a difference in your tax bill. Essentially, your bill is updated according to what information you provide in your tax return, and consequently, you might have to pay more tax or be eligible to claim a refund.
Ultimately, learning you have made a mistake on a tax return can catch you off-guard at first. However, as we stated earlier, it is not something that is out of place. Therefore, once you spot these mistakes, it is crucial that you rectify them promptly. As a result, it will help you prevent penalties and ensure accurate tax liability.
Learn how long you have to correct your self-assessment:
Once you have identified the errors you need to rectify, you must know the duration, within which, you must make the necessary changes in your tax return. It is because being heady of the correction deadline is crucial when figuring out how to correct errors in a self-assessment tax return.
If you filed your self-assessment tax return online via HMRC’s Government Gateway, you have up to 12 months after the filing deadline (January 31) to amend it.
While it is possible to correct your self-assessment after a 12-month window, we advise you to accomplish it within the allowed window since doing it beyond the deadline makes the process a little more complicated.
Furthermore, to remain stress-free, the simplest rule to follow is to amend your self-assessment as soon as possible if you have identified a mistake since putting it off until a later time will not let you off the hook, and you will eventually have to do it.
Understand how to correct an online tax return?
The next step in learning how to correct errors in a self-assessment tax return involves amending the online tax return. If you filed your self-assessment tax return online by signing up to your Government Gateway account, you can amend it by adhering to the following steps:
- First, you can log in to your HMRC online Account by visiting the government website.
- Next, you will enter your Government Gateway credentials.
- Access Your Tax Return by first selecting ‘Self Assessment’ from the main menu. Now, click ‘More Self-Assessment details’. Here, you can locate the tax year that needs correction.
- Make the necessary amendments by editing the incorrect sections (e.g., income, expenses, reliefs). Thereafter, you can save and double-check your changes.
- Lastly, you can resubmit the updated return by submitting the amended return. Moreover, it is advised to save the confirmation of submission for your records.
Regarding your tax bill, if you have corrected your tax return online, HMRC is likely to update your tax bill within three days. Now, in line with the amendments, if you owe more money, HMRC will issue you a new deadline to pay the remainder of your bill.
On the flip side, if your amendments make you eligible for a refund, you can go to your account’s Request Payment section and request a refund straight away. However, be mindful that it may take as long as a month for the money to appear in your account.
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How to correct a paper tax return?
It is equally significant to understand how to correct errors in a self-assessment tax return, given that you have filed it using pen and paper. Does it seem a little ambiguous? Let’s dig a little deeper!
If you submitted your self-assessment tax return using a paper form (SA100), you must make amendments by sending an updated version of the relevant pages.
For this purpose, follow these steps:
- You can download the relevant Self-Assessment (SA100) form from the HMRC website. Mark the corrections clearly by filling in the correct details and clearly indicate the changes. You should also attach a cover letter to explain the amendments.
- After correcting your form, you will send or post the amended/updated tax return to: Self Assessment, HM Revenue and Customs, BX9 1AS, United Kingdom.
- It is strongly recommended that you keep a copy of your amended return for reference.
You can also visit the government website to learn more about self-assessment tax return corrections.
Moving on, after you have sent an updated paper return, HMRC will send you an updated bill accordingly. You can expect to receive a response from HMRC in around four weeks.
If you owe more tax, HMRC will provide you with instructions on the next steps. On the other hand, in case you overpaid the tax, HMRC will submit any refund either through a bank transfer or by cheque. It will pay the amount directly into your bank account, provided that you include your bank details on your tax return.
Know how soon can you make corrections in a filed tax return:
We will mention yet again that it goes to your convenience to fix a mistake on your filed tax return as soon as you spot it. Once you identify an error, visit the government website to learn how to correct errors in a self-assessment tax return.
Nonetheless, HMRC has facilitated you by giving a deadline for amending any mistakes, which is one year after the online filing deadline of the tax return that you want to correct.
Let’s understand it with the following example:
Consider you realise that you made a few errors on your 2023/2024 tax return after submitting it to HMRC. As per HMRC’s deadline, you have until 31st January 2026 to rectify any mistakes, i.e., one year after the online filing deadline of 31st January 2025.
However, if you still miss this deadline, you can still contact or write to HMRC directly to explain your situation.
Further, consider the scenario wherein the 12-month amendment window has passed, and you are owed money. In such an event, you can make corrections through an Overpayment Relief claim.
This process allows you to request HMRC to adjust your tax return if you overpaid tax due to an error. For greater clarity, you can submit an Overpayment Relief Claim by sticking to the following steps:
- Write a Letter to HMRC
- Clearly state that you are making an Overpayment Relief claim.
- Include your name, UTR, tax year, and details of the error.
- Provide supporting documents, if applicable.
- Send the Letter to HMRC
- Post it to the relevant HMRC office handling your tax affairs.
Nevertheless, it might be relevant to point out here that HMRC normally processes Overpayment Relief claims within four years from the end of the relevant tax year. Therefore, it is rather far easier for you to amend your tax return within the given deadline so you can get your refund within a reasonable period.
Keep accurate records to prevent future errors:
HMRC requires self-employed individuals to maintain accurate records for at least 5 years after the 31 January filing deadline. Hence, maintaining accurate and up-to-date records constitutes a vital part of learning how to correct errors in a self-assessment tax return. Proper and precise record keeping includes:
- Income records, including all invoices and sales receipts.
- Expenses receipts and bank statements.
- PAYE records (if applicable).
Alternatively, seeking help from an expert accountant can help ensure compliance and accuracy.
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Consider what happens if HMRC finds an error before you do?
Unarguably, this guide exclusively centres on explaining how to correct errors in a self-assessment tax return so you can learn the steps involved in achieving the task.
However, have you wondered what would happen if HMRC spotted an issue before you did? Now that we have brought it up, you should also know the answer to this question. If HMRC identifies or discovers an error in your tax return, it can correct it and send you an updated tax calculation without you bearing the hassle of amending it. Easy peasy!
Nevertheless, if the mistake results in underpaid tax, HMRC might send you a Simple Assessment letter detailing the amount due. Apart from that, if such a situation occurs, you should:
- Review HMRC’s correction carefully to ensure they have discovered the correct and genuine mistake.
- If you realise that the errors HMRC has identified are invalid, you can dispute them within 30 days by contacting HMRC.
- Lastly, you will arrange payment if additional tax is owed to avoid penalties, whereas, in the event of overpayment, you can claim a refund.
Conclusion:
In essence, it is necessary for a self-employed individual to comprehend how to correct errors in a self-assessment tax return since it is vital to ensure tax compliance and avoid penalties.
Take note that whether it is amending an online submission, updating a paper return, or submitting an overpayment Relief claim, adhering to HMRC’s guidelines ensures accuracy in your tax affairs.
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Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.