Filling out a self-assessment tax return is one of those tasks that very few self-employed people in the UK actually enjoy, but the good news is that most of the problems people run into aren’t about complicated tax law — they’re about a fairly short list of common mistakes that crop up again and again, year after year, regardless of how long someone has been self-employed. Missed deadlines, forgotten income, overlooked expenses, and a nasty surprise called “payments on account” account for the vast majority of the stress, the penalties, and the late-January panic that so many self-employed people experience.
This guide walks through exactly what those mistakes look like, why they happen, and — more usefully — what to actually do instead, including a few changes that landed for the 2026/27 tax year specifically.
Quick Answer: The Most Common Self-Assessment Mistakes
The mistakes that cause the most problems for self-employed people filing a Self Assessment tax return are: missing the 5 October registration deadline for newly self-employed people, missing the 31 January filing and payment deadline (which triggers an automatic £100 penalty even if no tax is owed), forgetting to declare all sources of income, under-claiming or incorrectly claiming allowable expenses, and being caught off guard by “payments on account” — an advance payment toward the following year’s tax bill that can roughly double what’s due in January. Keeping organised digital records throughout the year, rather than reconstructing everything in January, prevents the majority of these issues.
The Deadlines That Actually Matter
Before getting into the mistakes themselves, it’s worth being precise about the dates involved, because confusion here is itself one of the most common errors. For the 2025/26 tax year (6 April 2025 to 5 April 2026), the key dates are:
31 January 2027 — the deadline to file your return online and pay any tax owed. This date also covers your first “payment on account” toward the 2026/27 tax year, which is where a lot of people get caught out (more on this below).
31 October 2026 — the deadline for paper returns, which is considerably earlier than the online deadline. Most people file online, but if you’re planning to file by post, this date catches people out every year.
30 December 2026 — if you want HMRC to collect tax owed (under £3,000) through your PAYE tax code rather than paying it as a lump sum, and you’re also employed, this is the deadline to file online to make that option available.
31 July 2027 — the deadline for your second payment on account for the 2026/27 tax year, if applicable.
If you’ve never filed a Self Assessment return before — for example, you became self-employed partway through the 2025/26 tax year — there’s an earlier deadline that’s easy to miss entirely: you need to register with HMRC by 5 October following the end of the tax year in which you started. Miss this, and you may not receive your Unique Taxpayer Reference (UTR) in time to file by January, which creates a cascade of problems that are entirely avoidable with early registration.
Common Mistake #1: Filing Late — Even by a Single Day
This is the mistake with the most immediate, guaranteed consequence. Miss the 31 January deadline by even 24 hours, and HMRC applies an automatic £100 penalty — even if you don’t actually owe any tax at all. There’s no grace period and no warning beforehand. The penalty is automatic and applies regardless of your circumstances at the point of filing.
It gets worse the longer it goes unresolved: further penalties apply at the 3-month, 6-month, and 12-month marks, on top of the initial £100, and interest accrues on any unpaid tax from 1 February at the Bank of England base rate plus 2.5%. A return that’s a few months late, with tax still owing, can end up costing considerably more than the original liability through penalties and interest alone.
Also Read: Understanding Taxation for UK Freelancers
The practical fix here is almost embarrassingly simple: file the return even if you can’t pay the tax bill immediately. Filing on time and paying late is a much better position than filing late — the late filing penalty is separate from, and often larger than, the late payment consequences in the early stages. If you genuinely can’t pay, contacting HMRC to discuss a Time to Pay arrangement before the deadline is far better than simply not filing.
Common Mistake #2: Forgetting Income You Didn’t Think “Counted”
A surprising number of Self Assessment errors come down to under-reporting income — not deliberately, but because people don’t realise certain income needs to be declared at all. This is especially common for people whose main income is from one source (a primary self-employed business, say) but who also have smaller income streams on the side.
Things that commonly get missed include: interest earned on savings above your Personal Savings Allowance, dividend income from shares held outside an ISA, rental income — even from a single room let out occasionally, income from selling goods or services through online platforms and marketplaces, and any freelance or consultancy income that arrived as a one-off rather than part of your “main” business.
The general principle is straightforward even if the specifics aren’t always obvious: if HMRC hasn’t already taxed it through PAYE, and it’s income rather than a gift or reimbursement, it likely needs to go on your return. When in doubt, declaring something that turns out not to be taxable is a far smaller problem than not declaring something that was.
Common Mistake #3: Getting Allowable Expenses Wrong — In Both Directions
This mistake cuts two ways, and both versions are genuinely common. Some self-employed people under-claim, missing out on legitimate deductions simply because they didn’t realise something qualified — leaving money on the table that reduces their tax bill entirely legally. Others over-claim, including costs that are personal rather than business-related, or claiming the full cost of something used for both business and personal purposes.
Commonly under-claimed expenses include a proportion of home costs if you work from home (a percentage of utility bills, council tax, and mortgage interest or rent based on the space and time used for business), a proportion of mobile phone and internet costs, professional subscriptions and trade body memberships, and bank charges and accounting software subscriptions related to the business.
On the home-working side specifically, HMRC offers simplified expenses — flat rates based on hours worked from home each month — as an alternative to calculating an actual proportion of household bills. This can genuinely save time, though it doesn’t always produce the largest possible deduction, so it’s worth understanding both methods rather than defaulting to whichever sounds easier.
For vehicle costs specifically, a common error is trying to claim both actual running costs (fuel, insurance, repairs) and the simplified mileage rate — these are alternative methods, and mixing them isn’t permitted. Pick one method for each vehicle and stick with it consistently.
Common Mistake #4: Not Understanding (or Forgetting About) Payments on Account
This is, in our experience, the single biggest source of January shock for newly self-employed people — and it’s almost entirely a communication problem rather than a tax problem, in the sense that the rules themselves are reasonably logical once explained, but they’re rarely explained clearly in advance.
If your Self Assessment tax bill is over £1,000 and less than 80% of your tax is already collected at source (which, for most self-employed people, is essentially all of it), HMRC requires “payments on account” — advance payments toward your next year’s tax bill, each equal to 50% of your previous year’s bill, due alongside your January and July payments.
In practice, this means that the first time someone with a meaningful tax bill files a return, the January payment isn’t just “this year’s tax” — it’s this year’s tax PLUS 50% of next year’s estimated tax, due as a single payment. For someone with a £4,000 tax bill in their first profitable year, the actual January payment could be £6,000 (the £4,000 owed, plus a £2,000 payment on account toward next year) — a figure that, without warning, can feel like the calculation has gone badly wrong, when in fact it’s working exactly as designed.
The fix isn’t to avoid payments on account — they’re not optional if you meet the criteria — but to budget for them from the start. Setting aside roughly 25-30% of profits into a separate savings account throughout the year, rather than only thinking about tax in January, turns this from a shock into a non-event. If your income drops significantly the following year, it’s also possible to apply to reduce your payments on account — though doing so incorrectly (reducing them below what’s actually owed) can result in interest charges, so this is worth getting right rather than guessing.
Common Mistake #5: Poor Record-Keeping — Especially With Making Tax Digital Now in Play
“I’ll sort the paperwork out in January” is one of the most common — and most expensive — approaches to Self Assessment, because reconstructing a year’s worth of income and expenses from memory, bank statements, and a shoebox of receipts months after the fact is where errors creep in on both sides: missed expenses, misremembered income, and numbers that don’t reconcile cleanly.
This has become considerably more important for some self-employed people from April 2026, when Making Tax Digital for Income Tax Self Assessment (MTD ITSA) became mandatory for sole traders and landlords with qualifying gross income over £50,000 in the relevant tax year. This threshold is set to fall to £30,000 from April 2027, and £20,000 from April 2028 — gradually bringing in smaller businesses over time.
For those affected, the shift is significant: instead of one annual return, MTD requires digital record-keeping throughout the year and quarterly updates submitted to HMRC through compatible software such as Xero, QuickBooks, or FreeAgent. Even for those below the threshold, adopting similar habits — recording income and expenses as they happen, rather than retrospectively — makes the annual return dramatically less stressful and less error-prone, MTD or not.
Separately, it’s worth knowing that HMRC requires records to be kept for at least 5 years after the 31 January submission deadline for the relevant tax year — so for a 2025/26 return filed by 31 January 2027, records need to be retained until at least early 2032. “I’ll just keep this for now and sort it later” tends to mean records get lost well before that window closes.
Common Mistake #6: Mixing Business and Personal Finances
This isn’t a legal requirement to avoid for sole traders the way it is for limited companies — but it’s one of the most common reasons a Self Assessment return takes far longer than it needs to, and one of the most common sources of both missed expenses and incorrectly claimed ones. If business income and personal spending flow through the same account, working out what was genuinely a business cost months later requires going through every transaction individually — and it’s exactly the kind of task that gets rushed in January, with predictable results.
A separate business bank account — even for sole traders where it’s not mandatory — makes this dramatically simpler, and most digital-first business accounts are free and take minutes to open. We’ve covered the best business bank accounts for UK sole traders and SMEs in more detail elsewhere on this site, but the short version is: even a basic free account used consistently for business transactions only will save hours at tax return time, every single year.
A Practical Checklist Before You File
Confirm your registration and UTR are sorted well before January. If you’re filing for the first time, the 5 October registration deadline (for the previous tax year) is the one that, if missed, can cascade into everything else being late too.
Gather every income source, not just your main one. Savings interest, dividends, rental income, marketplace sales, one-off freelance work — go through the full list deliberately rather than relying on memory.
Go through allowable expenses methodically, not from memory. Home working costs, phone and internet, professional subscriptions, and vehicle costs (using one method consistently) are the categories most commonly missed or mishandled.
Budget for payments on account if this is a profitable year. If your tax bill is likely to exceed £1,000, build in the expectation that January’s payment will likely be considerably more than “just this year’s tax.”
File even if you can’t pay immediately. The £100 automatic penalty for late filing is separate from, and often more punishing in the short term than, the consequences of late payment — don’t let an inability to pay delay the filing itself.
For the official guidance on registering for Self Assessment and getting your UTR, GOV.UK’s registration page is the starting point — and it’s worth doing this as early as possible if you’re newly self-employed, given the 10-working-day wait for your UTR to arrive by post. For a full breakdown of what counts as an allowable business expense, HMRC’s guidance on self-employed expenses sets out the categories and the simplified expenses flat rates in detail. And if Making Tax Digital might apply to you, GOV.UK’s overview of Making Tax Digital for Income Tax explains the thresholds and what compliant software needs to do.
Frequently Asked Questions
What happens if I file my Self Assessment tax return one day late?
HMRC applies an automatic £100 penalty the moment the 31 January deadline passes, even if you’re only a day late and even if you owe no tax at all. Further penalties apply at 3, 6, and 12 months if the return remains outstanding, and interest accrues on any unpaid tax from 1 February.
Do I need to file a Self Assessment return if I made a loss or owe no tax?
If HMRC has issued you with a notice to file — which happens once you’re registered for Self Assessment — you generally need to file a return regardless of whether you made a profit, a loss, or owe any tax. The £100 late filing penalty applies even where the resulting tax bill is £0, so registration and filing obligations are separate from whether tax is actually due.
What is a ‘payment on account’ and why is my first tax bill so much higher than expected?
A payment on account is an advance payment toward next year’s tax bill, required if your Self Assessment liability is over £1,000 and less than 80% of your tax is collected at source. Each payment on account is 50% of the previous year’s bill, split between January and July. This means your first January payment as a newly profitable self-employed person can be roughly 1.5 times your actual tax bill for that year — the extra 50% is a head start on the following year, not an error.
Can I claim expenses for working from home as a self-employed person?
Yes. You can either use HMRC’s simplified expenses flat rates based on hours worked from home each month, or calculate the actual business proportion of household costs such as utilities, council tax, and rent or mortgage interest based on the space and time used for business. You can choose whichever method suits your situation, but you should apply it consistently rather than mixing approaches within the same tax year.
Who needs to comply with Making Tax Digital for Income Tax from 2026?
From April 2026, sole traders and landlords with qualifying gross income over £50,000 must keep digital records and submit quarterly updates to HMRC using compatible software, rather than filing a single annual return. The threshold is due to fall to £30,000 from April 2027 and £20,000 from April 2028, bringing more self-employed people into scope over the following years.
Conclusion
None of the mistakes covered in this guide require a deep knowledge of tax law to avoid — which is, in a way, the most reassuring part of all this. The self-assessment tax return process for most self-employed people in the UK goes wrong not because the underlying tax rules are too complicated, but because of timing: registering too late, filing too late, not knowing about payments on account until they arrive, and trying to reconstruct a year’s records in a single January weekend.
Also Read: Private School Tax (VAT): What Every Parent Must Know
The single change that prevents the largest share of these problems is also the simplest: treat record-keeping as something that happens throughout the year, not as a January task. A separate business account, expenses logged as they happen, and a rough tax set-aside from every payment received turns Self Assessment from an annual ordeal into what it’s actually meant to be — a fairly mechanical exercise in reporting numbers you already have to hand. For anyone whose income is approaching the Making Tax Digital thresholds, that shift in habit isn’t just helpful anymore; from 2026 onwards, for a growing number of people, it’s becoming the rule rather than the recommendation.
Disclaimer: This article is for informational purposes only and does not constitute tax or financial advice. Self Assessment deadlines, penalties, allowances, and Making Tax Digital thresholds are correct as of mid-2026 but may change. Always check current guidance at gov.uk or consult a qualified accountant for advice specific to your circumstances.
