Why Self-Assessment Mistakes Happen So Often
For millions of UK taxpayers, filing a Self-Assessment Tax Return is a yearly ritual — one that combines deadlines, spreadsheets, and HMRC forms. Yet every year, tens of thousands of people make costly errors that trigger penalties, repayments, or unwanted investigations.
According to HMRC, over 12 million people submit Self-Assessment returns annually, and thousands face fines due to simple but preventable mistakes.
These Self Assessment mistakes aren’t limited to the self-employed — they affect landlords, directors, investors, and even employees with multiple income streams. Whether it’s forgetting a section, claiming the wrong expense, or filing late, the financial and reputational impact can be serious.
Let’s explore the most common errors, why they occur, and how to fix them before HMRC does.
Understanding the Self-Assessment System
The UK’s Self-Assessment system allows individuals to report income and calculate their tax liability when PAYE doesn’t cover all sources. You must file if you:
- Are self-employed or in a partnership
- Earn income from property, dividends, or foreign sources
- Receive untaxed income (freelance, consultancy, side jobs)
- Are a company director (without PAYE only)
The tax year runs from 6 April to 5 April, and the online filing deadline is 31 January following the end of that tax year.
Missing deadlines, misreporting income, or incomplete data are among the biggest Self Assessment mistakes — all of which can be avoided with preparation or professional help.
For assistance, explore Loyals’ Self-Assessment Tax Return Service.
The Most Common Self-Assessment Mistakes
1. Missing the Deadline
Every year, HMRC issues automatic £100 late filing penalties even if you owe no tax. After three months, daily fines of £10 apply (up to £900), plus further charges after six and twelve months.
Leaving it to the last minute is one of the easiest but costliest mistakes. Submitting early not only avoids fines but also gives you time to correct any issues before HMRC reviews your return.
๐ Source: GOV.UK – Self Assessment Deadlines and Penalties
2. Entering Incorrect Personal or Business Details
Typos in your Unique Taxpayer Reference (UTR), National Insurance number, or address may seem minor but can delay processing or trigger mismatched records. Similarly, entering the wrong business start date or selecting an incorrect accounting method (cash vs accrual) can distort your taxable profit.
Always double-check all identifiers before submission.
3. Misreporting Income
Failing to declare all sources of income — even small ones — is a major HMRC red flag. Commonly missed items include:
- Interest from savings accounts
- Dividend income
- Freelance or consulting side jobs
- Overseas income (e.g. digital work or rental properties abroad)
- Cryptocurrency gains
HMRC cross-checks Self-Assessment data with employers, banks, and investment platforms. Undeclared income, even unintentionally, can result in fines up to 100% of the unpaid tax.
Further info: HMRC – Tax on Savings and Investments.
4. Claiming Ineligible or Exaggerated Expenses
Another frequent error is claiming expenses that aren’t “wholly and exclusively” for business purposes. Examples:
- Home broadband and phone bills not apportioned correctly
- Clothing not specific to work (e.g., normal suits)
- Travel to regular places of work (not allowable)
- Meals not incurred while on business trips
These mistakes are easy to avoid by keeping itemised digital receipts and separating personal and business costs.
At Loyals, we help clients identify legitimate expenses and avoid invalid claims that attract HMRC scrutiny.
5. Forgetting to Include Pension or Gift Aid Contributions
Many taxpayers overlook pension contributions or charitable donations when completing their Self-Assessment. Including these can reduce taxable income, potentially saving hundreds of pounds in tax relief.
HMRC’s online form has dedicated sections for both — but they’re often missed, especially when users rush through the return.
6. Misunderstanding the Payment on Account System
If you owe more than £1,000 in tax and less than 80% has been collected through PAYE, HMRC will require Payments on Account — two advance payments toward next year’s bill (January and July).
Many first-time filers forget this, assuming their liability ends once they pay the first balance. Failing to plan for the second instalment can create unexpected cash-flow stress.
More info: HMRC – Payments on Account Explained.
7. Not Updating Business Records
HMRC expects all businesses to keep digital records for at least five years after the 31 January filing deadline. Failure to do so can lead to estimated assessments or penalties if audited.
Common mistakes include:
- Losing paper receipts
- Not backing up digital invoices
- Forgetting to record small expenses or cash payments
Using cloud-based software like Xero or QuickBooks helps maintain accurate records automatically.
8. Incorrect VAT or PAYE Reporting for the Self-Employed
Some sole traders registered for VAT make the mistake of including VAT-inclusive income in their Self-Assessment profit — effectively paying tax twice on the same amount.
Likewise, if you employ staff, forgetting to reconcile PAYE submissions against your return can distort totals.
These errors are complex but preventable with professional oversight. Explore Loyals’ Tax Compliance Services to keep VAT, PAYE, and Self-Assessment aligned.
9. Submitting Before Checking
In the rush to meet deadlines, many filers hit “submit” without reviewing totals. Once submitted, amendments require resubmission or contacting HMRC. Always preview the final summary and verify:
- Taxable income matches your records
- Deductions and reliefs are correct
- Payment on Account is included if due
10. Ignoring HMRC Messages or Letters
Sometimes the biggest mistake isn’t filing — it’s not responding. If HMRC requests clarification or additional documents and you ignore it, they may impose penalties even if your return was correct.
Always check your HMRC Personal Tax Account for notifications or messages, especially around filing season.
The Cost of Getting It Wrong
Self-Assessment mistakes carry both financial and emotional costs.
- Late filing: £100 automatic penalty, increasing daily after 3 months.
- Inaccurate returns: 15–100% of tax owed, depending on severity.
- Interest on unpaid tax: charged from the due date.
- Audit risk: HMRC can open enquiries going back up to 6 years.
Even a minor oversight can snowball if left unresolved. Correcting errors proactively saves time, stress, and money.
๐ HMRC Reference: Self Assessment Penalties
How to Correct a Mistake
If you realise you’ve made an error after filing, don’t panic — HMRC allows amendments within 12 months of the filing deadline.
Steps to fix it:
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Log in to your HMRC account.
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Choose “Amend Return” for the relevant tax year.
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Update the information and resubmit.
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If the error is substantial, contact HMRC directly and explain.
Alternatively, professional accountants can handle the correction on your behalf, ensuring consistency across all records.
At Loyals, we help clients correct past returns, manage HMRC correspondence, and minimise penalties.
Case Study: A Freelancer’s Costly Oversight
Sarah, a freelance marketing consultant, submitted her Self-Assessment on time but forgot to include £4,000 from a small overseas project. Months later, HMRC flagged the mismatch through bank data.
She faced a £400 underpayment fine plus interest. After working with her accountant to amend the return, Sarah learned to log every income stream and maintain digital receipts via Xero.
A small oversight cost her time and money — but also served as a reminder of the value of professional review.
How Professionals Prevent These Mistakes
The easiest way to avoid Self Assessment mistakes is to delegate the process to specialists who handle it daily.
Professional accountants:
- Keep up to date with HMRC changes
- Review your income sources for completeness
- Apply legitimate deductions and reliefs
- Manage digital record-keeping under Making Tax Digital (MTD)
- File early and error-free
At Loyals, we make the process effortless. Our Self-Assessment Tax Return Service, ensures every figure is verified and every deadline met.
Self-Assessment doesn’t have to be stressful — but it does require care. Most Self Assessment mistakes stem from rushing, misunderstanding rules, or skipping professional review.
The good news: every one of them is preventable. By keeping organised records, double-checking entries, and filing early (or outsourcing the task entirely), you’ll stay compliant and in control.
๐ Avoid penalties before they start. Book a call with Loyals
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