6 Common Self-Assessment Tax Return Mistakes and How to Avoid Them

Whether you're new to self-assessment or managing multiple sources of income, avoiding common errors early on can save you time, stress, and money.

In this guide, we’ll walk you through the most common self-assessment mistakes and provide practical tips to help you file accurately and stay compliant with HMRC.

Self-Assessment Tax Returns Mistakes to Avoid

Following are the common mistakes people make when filing self-assessment tax returns:

Mistake 1: Missing the Deadline

Missing the deadlines for your UK self-assessment is a common mistake that can lead to immediate and escalating penalties from HMRC. The online filing deadline is 31 January, following the end of the tax year (6 April to 5 April). If you miss it, HMRC will issue an automatic £100 penalty, with additional daily or percentage-based fines if the delay continues.

Why It Happens: People often miss this critical deadline due to procrastination, poor planning, forgetting deadlines or encountering last-minute technical issues.

How to Avoid It:

• Mark key dates in your calendar, 31 Jan for filing and payment, 31 July for second payments on account (if applicable), and set recurring reminders.

• Aim to file at least a month early to allow time for unexpected issues or clarifications.

• Check your HMRC online account in advance to confirm login access and review any outstanding information.

• Use HMRC’s self-assessment portal to monitor submission status and keep track of your obligations.

Mistake 2: Failing to Declare All Taxable Income

Failing to declare all sources of taxable income, no matter how small or irregular they may seem, can lead to penalties, interest charges, and may even trigger a detailed HMRC investigation into your tax affairs.

Commonly missed income includes:

• Rental income (from UK or overseas properties)
• Dividends or interest earned outside of ISAs
• Foreign income (including pensions and employment income)
• Earning from freelance work, consulting or side hustles
• Income from online platforms or the digital economy

HMRC increasingly uses sophisticated data-matching techniques and information from third parties to identify discrepancies between what you report and your actual income.

Why It Happens: This often occurs due to inadequate record-keeping, overlooking irregular income sources or simply not knowing how or where to report certain types of income on the self-assessment return.

How to Avoid It:

• Keep detailed and organised records of all income received throughout the tax year, including bank statements, invoices, payment confirmations, dividend vouchers, and rental income and expense tracking.

• Refer to HMRC’s SA100 guidance notes to ensure you’re declaring all relevant income.

• If unsure what counts as taxable income, contact HMRC or seek advice from a qualified tax adviser.

Mistake 3: Not Claiming Allowable Expenses

Many taxpayers, especially sole traders, freelancers, and landlords, overpay tax each year by failing to claim all allowable business expenses. These are genuine costs incurred wholly and exclusively for running your business or property letting, and they can significantly reduce your taxable profits. Overlooking these deductions means you could end up paying more tax than necessary.

Why It Happens: This mistake often arises from a lack of awareness about what counts as an allowable expense, poor record-keeping, failure to retain receipts, or disorganised accounting practices. Without accurate records, legitimate claims are easily missed.

How to Avoid It:

• Keep a running log of business-related expenses throughout the year, and retain both digital and paper receipts.

• Refer to HMRC’s guidance on allowable expenses relevant to your business type, and avoid claiming vague or personal costs that could attract scrutiny.

• Use accounting tools like Taxd (or similar software) to help identify and track deductible expenses, especially helpful if you're unsure what qualifies.

Mistake 4: Making Calculation Errors

Miscalculating your tax can result in either underpayment or overpayment — both of which can create problems. Underpaying may lead to HMRC penalties and interest charges, while overpaying means unnecessarily reducing your own income. Even small mistakes can compound over time, especially when dealing with multiple income sources or more complex tax rules.

Why It Happens: These errors often occur due to reliance on manual calculations, misunderstanding how tax rules apply to your specific circumstances, or entering figures incorrectly from various income sources.

How to Avoid It:

• Use trusted tax software that automatically handles calculations and is regularly updated in line with HMRC guidance.

• Double-check all figures and entries before submitting your self-assessment return.

• If you're unsure about any aspect of your calculation or filing, it’s best to speak with a tax adviser or accountant.

Mistake 5: Entering Incorrect Personal Details

Even seemingly minor errors in your personal information, such as your National Insurance number, full name, current address, or date of birth, can cause delays in processing your self-assessment return, or even result in it being rejected by HMRC. Ensuring these details are accurate and up to date is essential for smooth processing and to avoid issues with other HMRC services.

Why It Happens: These errors usually occur due to typos, outdated personal information, or inconsistencies between your return and HMRC’s existing records.

How to Avoid It:

• Carefully review all personal information before submitting your return.

• Ensure HMRC has your most up-to-date records, especially if you’ve recently moved or changed your name.

• Verify that the information you provide, for example, when tracing pensions or updating tax details, matches the records held by HMRC.

Mistake 6: Not Understanding Payments on Account

If your tax bill is over £1,000 and less than 80% of your income is taxed at source (like PAYE), HMRC may require you to make Payments on Account, advance payments toward next year’s tax bill. Many taxpayers are caught off guard, especially by the second payment due in July.

Why It Happens: This usually occurs due to a lack of awareness of how Payments on Account work, or because the second instalment in July is forgotten or unbudgeted for.

How to Avoid It:

• Check HMRC’s calculation after submitting your return to see if Payments on Account apply

• Budget ahead for the second payment due on 31 July to avoid cash flow issues

• Apply to reduce payments if your income is expected to fall next year, but be cautious, as HMRC may charge interest if you underpay without justification

Conclusion

Filing your self-assessment tax returns correctly and on time is crucial for staying in good standing with HMRC and avoiding unnecessary penalties. The key to managing this process smoothly lies in recognising and avoiding the six common mistakes that can lead to unnecessary stress, confusion, or unexpected costs. Keeping accurate records, filing online, and using trusted tax software can simplify the entire process. And if you’re ever unsure, it’s always wise to seek support. Taxd, a smart UK-based online tax filing platform, is designed to make self-assessment easier, faster, and more accurate.

Stay informed, stay organised, and make this tax season as smooth as possible!

FAQs

1. What is Self-Assessment, and Who Does It Apply To?

Self-assessment is the system HMRC uses to collect Income Tax from individuals and businesses whose income isn’t automatically taxed, for example, through PAYE. If you earn more than £1,000 from self-employment, side jobs, rental income, or other untaxed sources, you are required to register for self-assessment and submit a tax return each year.

It typically applies to:

• Self-employed individuals (including sole traders and freelancers)
• Company directors
• Landlords earning rental income
• People with income from overseas
• Individuals with capital gains to report
• Those earning over £100,000 per year

Even if you’re employed and pay tax through PAYE, you may still need to file a return if you have additional income that hasn't been taxed.

2. What Happens After Filing a Self-Assessment Tax Return?

Once you submit your self-assessment tax return, HMRC will calculate your tax liability based on the information provided. You’re then responsible for paying any tax owed by the relevant deadlines.

Payments can be made through various methods, including bank transfer, debit card or direct debit, but the key due dates to remember are:

• January 31st: Deadline to file your return and pay any tax owed for the previous tax year (balancing payment), plus the first Payment on Account (if applicable)

• July 31st: Deadline for the second Payment on Account (if applicable)

Late payments may result in interest charges and penalties, so it’s important to plan ahead and budget accordingly.

3. What Should I Do if I Miss the Self-Assessment Deadline?

If you miss the self-assessment filing deadline, don’t panic, but act quickly. File your return as soon as possible to minimise penalties and interest.

HMRC charges a £100 late filing penalty immediately after the deadline (even if you don’t owe any tax), and further penalties apply the longer the delay continues. If you also owe tax, interest will accrue until the amount is paid in full.

What to do:

• Submit your tax return immediately, even if it’s late
• Pay any outstanding tax as soon as possible to limit further charges
• If you have a reasonable excuse (e.g. serious illness or bereavement), you may be able to appeal the penalty

4. How Do I Correct a Mistake on My Self-Assessment Tax Return?

If you realise you've made a mistake on your self-assessment tax return, you can amend it within 12 months of the original filing deadline.

To make corrections:

• Sign in to your HMRC online account.
• Select the relevant tax year and follow the instructions to make the necessary corrections.
• Keep a record of any changes you make, and note the updated figures for your records.

If your correction results in additional tax owed, be sure to pay it promptly to avoid interest or penalties. If a refund is due, HMRC will usually process it within a few weeks.