Every January, thousands of UK taxpayers submit self-assessment returns containing costly errors that could have easily been avoided. Some mistakes trigger penalties and interest charges. Others mean you’re paying far more tax than you actually owe. Either way, these errors are expensive, and surprisingly common.

Whether you’re a seasoned sole trader or filing your first return, understanding these pitfalls could save you thousands of pounds. Even better, knowing what HMRC looks for can help you avoid the dreaded enquiry letter that lands on your doormat months later.

Let’s walk through the ten most expensive mistakes people make on their self-assessment returns, and, more importantly, how to avoid them.

1. Missing the deadline and facing automatic penalties

This might seem obvious, but missing the 31st January deadline remains the single most common and most avoidable mistake. What catches people out is just how quickly the penalties escalate.

Miss the deadline by even one day and you’ll face an immediate £100 penalty, regardless of whether you actually owe any tax. Three months late? That’s £10 per day (up to £900). Six months? Another £300 or 5% of tax due. Twelve months? The same again.

For someone owing £5,000 in tax who files twelve months late, the penalties alone could exceed £2,000 and that’s before interest charges on the unpaid tax.

How to avoid it: Set multiple calendar reminders starting in November. Better yet, aim to file by Christmas to avoid the January rush and give yourself breathing room if issues arise.

2. Claiming expenses you’re not entitled to

The temptation to be “creative” with expenses costs taxpayers dearly when HMRC investigates. Common errors include claiming 100% of costs that should be apportioned (like home broadband when you’re only working 50% from home), or claiming personal expenses as business costs.

HMRC’s computers are surprisingly good at spotting unusual expense patterns. Claim vastly more than similar businesses in your sector, and you’re likely to trigger an enquiry.

The expensive consequences: If HMRC discovers you’ve overclaimed, they’ll not only recalculate your tax bill but may also charge penalties of 30-100% of the tax due, plus interest backdated to the original filing date.

How to avoid it: Only claim expenses that are “wholly and exclusively” for business purposes. When in doubt, err on the side of caution or seek professional advice. Keep detailed records and receipts for everything you claim.

3. Failing to claim all the reliefs and allowances you’re entitled to

Whilst overclaiming is dangerous, underclaiming is equally costly, you’re simply leaving your own money with HMRC. Many taxpayers don’t realise they can claim:

• Marriage Allowance: Transfer £1,260 of your personal allowance to your spouse (worth £252).
• Trading allowance: £1,000 tax-free if you have small amounts of self-employment income.
• Property allowance: £1,000 tax-free for rental or subletting income.
• Pension tax relief: Higher and additional rate taxpayers can claim extra relief.
• Professional subscriptions: Membership fees for approved professional bodies.
• Working from home allowance: Up to £6 per week without needing receipts.

Missing just a few of these could cost you £1,000+ annually.

How to avoid it: Review HMRC’s full list of allowable reliefs each year, or work with an accountant who’ll ensure you’re claiming everything you’re entitled to.

4. Getting your income figures wrong

This sounds straightforward, but income errors are shockingly common. Mistakes include:

• Using your bank balance instead of invoiced income (if you’re cash accounting)
• Forgetting to include interest from savings accounts.
• Missing dividend income from investments.
• Not declaring rental income because “it only covers the mortgage”.
• Overlooking side income from platforms like eBay, Etsy, or Airbnb.

HMRC receives data feeds from banks, investment platforms, and even some online marketplaces. If their figures don’t match yours, you’ll receive a query.

How to avoid it: Reconcile all income sources before filing. Request P60s from employers, dividend vouchers from investments, and interest statements from all bank accounts. Don’t rely on memory

5. Incorrect National Insurance calculations

National Insurance for the self-employed confuses almost everyone. You’ll pay:

Class 2 NICs: £3.45 per week (£179.40 annually) if profits exceed £12,570

Class 4 NICs: 9% on profits between £12,570 and £50,270, then 2% above that.

Many taxpayers either forget about Class 2 entirely or miscalculate Class 4 contributions when their income straddles the thresholds.

Getting this wrong means either underpaying (triggering penalties) or overpaying (losing money you could have kept).

How to avoid it: Use HMRC’s online calculator or accounting software that automatically computes NI contributions. Double-check the figures before submitting.

6. Not keeping adequate records

HMRC requires you to keep records for at least five years after the 31st January submission deadline. Many taxpayers either don’t keep records at all or discard them too early.

When HMRC opens an enquiry (and they can do so up to 12 months after you file), they’ll ask for evidence supporting your return. No records? You’ll struggle to defend your claimed expenses, and HMRC will likely disallow them entirely.

The cost: One investigation found a freelance consultant who’d claimed £12,000 in expenses but couldn’t produce receipts. HMRC disallowed the lot, resulting in a £4,800 additional tax bill plus penalties and interest – over £6,000 total.

How to avoid it: Implement a simple system: photograph receipts immediately, use accounting apps that digitise records, or use a dedicated email folder for electronic receipts. Make it automatic.

7. Forgetting about Capital Gains Tax

Sold some shares? Disposed of a second property? Took profits on cryptocurrency? You might owe Capital Gains Tax (CGT) and forgetting to declare it is an expensive mistake.

Everyone has an annual CGT allowance (£3,000 for 2024/25), but gains above this are taxable at 10% or 20% depending on your income level (or 18%/24% for residential property).

Many taxpayers either don’t realise CGT applies to them or assume it’s automatically calculated. It isn’t, you must declare it.

How to avoid it: Review all asset disposals during the tax year. This includes shares, second properties, business assets, and even valuable collectibles. Calculate gains carefully, deducting allowable costs.

8. Mixing up tax years when you’re self-employed

This catches out many first-time self-employed filers. Your tax year runs from 6th April to 5th April, not the calendar year or your business’s accounting year-end.

Common mistakes include:

• Using calendar year figures (January to December)
• Filing accounts for your business year-end that don’t match the tax year.
• Forgetting to include or exclude income that falls just outside the tax year dates.

How to avoid it: Always work with figures that align precisely with 6th April to 5th April. If your accounts don’t match these dates, you’ll need to apportion income and expenses accordingly.

9. Incorrectly calculating business mileage

Business mileage is one of the most valuable deductions for self-employed taxpayers, but it’s also one of the most frequently miscalculated.

You can claim 45p per mile for the first 10,000 business miles and 25p thereafter. However, you must:

• Only claim business mileage, not commuting.
• Keep a detailed mileage log.
• Not claim both mileage and actual vehicle costs (it’s one or the other).

Claiming £8,000 in mileage without adequate records is a red flag for HMRC. Equally, not claiming the mileage you’re entitled to costs you money.

How to avoid it: Use a mileage tracking app that logs journeys automatically. Record the business purpose of each trip. Review your total annually to ensure it’s reasonable for your business type.

10. Not declaring overseas income or failing to claim foreign tax credits

With remote work increasingly common, many UK taxpayers have overseas income without realising they need to declare it. This includes:

• Rental income from foreign properties.
• Income from overseas employment or consultancy.
• Interest or dividends from foreign bank accounts or investments.

Failing to declare overseas income can result in serious penalties. However, many people also overpay by not claiming credit for foreign tax already paid, effectively being taxed twice on the same income.

How to avoid it: Declare all worldwide income on your UK return. If you’ve paid foreign tax, use the foreign tax credit relief section to avoid double taxation. Keep documentation of foreign taxes paid.

Why do these mistakes happen so often?

The honest answer? Self-assessment is complicated, the rules change frequently, and most people only deal with it once a year, not often enough to become an expert.

Time pressure makes things worse. When you’re rushing to meet the January deadline, errors creep in. You might misread a form, transpose numbers, or simply forget to include something.

This is precisely why many accountancy firms recommend professional support, even for relatively straightforward returns. The cost of an accountant is almost always less than the cost of mistakes, penalties, and wasted tax reliefs.

How can outsourcing prevent these costly errors?

For accountancy practices, self-assessment season creates the perfect conditions for errors:

• Extreme time pressure with everyone filing in January.
• Exhausted staff working excessive hours.
• Limited time for thorough reviews.
• Complex cases squeezed between routine returns.

Professional outsourcing providers like Integra specialise in error prevention through:

Multi-layer review processes: Every return passes through AI validation, experienced preparers, and UK-qualified supervisors before submission.

Automated error checking: Technology flags common mistakes like incorrect NI calculations, missing income sources, or unusual expense patterns.

Consistent quality standards: Unlike overwhelmed in-house teams during peak season, outsourced teams maintain steady quality regardless of volume.

Up-to-date expertise: Dedicated tax teams stay current with rule changes, ensuring returns reflect the latest regulations.

People Also Ask

Q1. What happens if I make a mistake on my self-assessment?
A1. You can correct mistakes within 12 months by filing an amended return through your HMRC online account. Beyond 12 months, you’ll need to write to HMRC. If the error results in underpaid tax, you’ll owe interest from the original deadline. Deliberate errors may incur penalties.

Q2. How far back can HMRC investigate tax returns?
A2. HMRC can normally investigate up to 4 years back. However, if they suspect careless errors, this extends to 6 years. For deliberate tax evasion, they can be investigated for up to 20 years. This is why keeping accurate records for at least 6 years is crucial.

Q3. Can I claim tax back if I’ve overpaid?
A3. Yes, you can claim refunds for overpaid tax up to 4 years after the end of the tax year. For example, if you overpaid in 2024/25, you have until 5th April 2029 to claim. File an amended return or write to HMRC with supporting evidence.

Q4. Do I need an accountant for self-assessment?
A4. It’s not legally required, but accountants typically save you more in tax optimisation and error prevention than they cost in fees. If your tax affairs are complex (multiple income sources, overseas income, capital gains), professional help is highly recommended.

Don’t Risk Costly Mistakes This Tax Season

With just weeks until the 31st January 2026 deadline, the pressure is mounting. Whether you’re an accounting firm handling hundreds of returns or a business tackling your own self-assessment, mistakes are expensive and surprisingly easy to make.

Integra has been helping UK accountancy practices avoid costly errors since 2004. Our combination of AI-powered validation, experienced preparers, and UK-qualified supervisors catches mistakes before they become problems.

Why Integra for Self-Assessment?

• Zero-error guarantee: Multi-stage quality checks on every return.
• 70% cost savings: Compared to hiring temporary staff.
• 48-hour turnaround: Even during peak season.
• UK-qualified oversight : Every return reviewed by ICAEW/ACCA qualified supervisors.
• Comprehensive mistake prevention : AI flags all 10 common errors automatically.
• ISO 27001 certified security: Your data is protected to the highest standards.

Get your free error prevention assessment

We’re offering accountancy practices a complimentary review of your self-assessment processes. We’ll identify where errors typically occur and show you exactly how our system prevents them with no obligation.

The cost of mistakes far exceeds the cost of getting it right the first time.

Every year, UK taxpayers pay millions in unnecessary penalties and miss out on thousands in legitimate tax reliefs. Don’t let your practice or your clients become statistics.

Contact us Today

Visit: www.globalintegra.co.uk

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