Research finds SEISS and crypto investments could lead to Self Assessment errors

Almost a quarter (24%) of self-employed people feel self-assessment is the worst thing about working for themselves, with confusion around exactly what should be included on the form.

More women (29%) than men (13%) say they hate doing tax returns, ranking it as the number one gripe about being self employed. And, with less than two weeks until self-assessment deadline, experts are warning people to be aware of key changes to the process this year.

According to research from GoSimpleTax, there’s no consensus on whether people should include SEISS Covid support they received. The data shows 13% of people feel they won’t need to include it and 9% are not sure if it needs to be accounted for. However, grants do need to be properly accounted for if claimed – or people risk fines or even accidently paying double tax on the grants received.

Mike Parkes, tax expert at GoSimpleTax, said: “Anyone who received a SEISS grant in the 2020/21 tax year must include it on their tax return this year. Crucially, it needs to be accounted for in the right place on the form – there is a dedicated area for declaring Covid-19 relief grants. If you include it in your general income, chances are your SEISS grant will be added automatically, and you will end up paying tax on it twice.”

The survey showed that a high proportion (42%) of self employed people generate additional income from other sources such as Facebook, eBay, investments, property rentals, social media and cryptocurrency investments. Yet 14% aren’t sure if they should account for additional income streams on their self-assessment and a further 12% say they won’t include it.

Mike added: “Income should be considered as a whole – it doesn’t really matter where your income is coming from, what’s important is that it’s all declared and accounted for. If you have a side hustle selling on Facebook Marketplace, or have dabbled in cryptocurrency which has generated income, you need to consider this income as part of your overall taxable amount.

“As with so many things, the key to tax success is in preparation. Get ahead of the 31 January deadline and give yourself time to prepare a complete return. If you’re in doubt about what to include, a software like GoSimpleTax can prompt you to consider what income to declare and where it should sit.”

Every year, millions leave their tax return until the final days and this year is no different, with 16% admitting they plan to leave until last minute. The research found barriers to submitting on time include a lack of financial knowledge (12%), concern over how much they owe (11%), and difficulty navigating the HMRC website (9%).

Earlier this month, HMRC announced that once again it was waiving late penalties for anyone filing self-assessment tax returns after this month’s deadline.

Mirroring last year’s move, self-employed people will now have an additional 28 days to submit their 2020/21 tax return and pay any tax due, without being penalised.