Common tax mistakes business owners make include missing deadlines, poor record keeping and not using the allowances and reliefs they can claim. A tax calendar, organised records kept throughout the year and professional guidance can help you avoid them.
Why Is Missing Deadlines Such a Common Tax Mistake?
Missing tax deadlines is one of the most common tax mistakes business owners make, and one of the costliest.
For Self Assessment, the online filing deadline is 31 January, and missing it triggers an automatic £100 penalty from HMRC, even if you don’t owe any tax. A second payment on account is due by 31 July for many sole traders and landlords.
These dates are also becoming more frequent under Making Tax Digital for Income Tax, which since April 2026 has required quarterly digital updates from sole traders and landlords with qualifying income over £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028.
Staying organised with your tax calendar, or having an accountant track it for you, ensures everything is submitted on time and keeps your business compliant.
To keep on top of your deadlines:
- Put every tax date that applies to you in one calendar, with a reminder a few weeks before each one.
- Note which dates are for sending a return and which are for paying tax, as they are not always the same.
- Agree in writing who sends each return: you or your accountant.
- Don’t wait for a reminder from HMRC. Filing and paying on time is your responsibility.
Filing your Self Assessment return early doesn’t mean paying early. The tax is still due by 31 January, so an early return simply gives you more time to plan for the bill.
How Does Poor Record Keeping Cause Tax Problems?
Accurate record keeping is essential for managing your tax obligations correctly. HMRC requires the self-employed and landlords to keep records for at least 5 years after the 31 January submission deadline for the relevant tax year.
When records are incomplete or poorly maintained, it becomes difficult to calculate the right amount of tax, which can lead to errors, overpayments, or problems if HMRC opens a review.
This is a particularly common issue for landlords juggling multiple properties and expense categories. Keeping detailed, organised records, ideally with proper bookkeeping in place throughout the year, makes the entire tax process far easier and more accurate.
Are You Missing Out on Available Allowances?
Many business owners unknowingly pay more tax than necessary because they are not aware of the allowances and reliefs they can claim.
Sole traders may be eligible for the £1,000 trading allowance, which you claim instead of your actual expenses rather than on top of them, while businesses investing in equipment can often claim the Annual Investment Allowance against qualifying purchases.
Directors of limited companies have a different set of reliefs available again.
Without proper guidance, it is easy to miss out on these benefits. Understanding what you are entitled to, or working with a professional who does, ensures you are not overpaying and are making the most of the savings available to you.
Are You Mixing Business and Personal Spending?
Mixing business and personal spending is another common tax mistake. It makes your records harder to follow and raises the risk of claiming costs that are not allowable.
Only costs that are wholly and exclusively for the business can be claimed. Where a cost is partly personal, such as a mobile phone used for both, you may be able to claim only the business part.
A separate business bank account is the simplest fix. Pay business costs from it, keep personal spending out of it, and your bank feed will do much of the sorting for you.
If you run a limited company, personal spending paid for by the company usually goes through your director’s loan account, which has its own tax rules.
Are You Setting Money Aside for Your Tax Bill?
Not planning for the tax bill is a mistake that can cause real cash flow pressure. If you are self-employed, tax is usually not taken from your business income as you earn it, so the bill can arrive all at once.
Payments on account can add to this. They are advance payments towards next year’s tax, so a January bill can include part of the following year’s tax as well as the balance for the year just gone.
A simple habit helps. Each time you are paid, move a share of it into a separate savings account kept only for tax. Your accountant can help you work out a sensible share for your income.
Limited companies need to plan for Corporation Tax in the same way, so the money is there when the bill is due.
What Should You Do If You Find a Mistake?
Finding a mistake is not a reason to panic, but ignoring it is the worst response.
If you spot an error in a Self Assessment return you have already sent, you can usually amend it, as long as you are still within HMRC’s time limit for amendments.
If the error means you have paid too little tax, telling HMRC yourself, before it asks, is generally treated more favourably than waiting for HMRC to find it. An accountant can help you work out what needs correcting and how to tell HMRC.
How Can an Accountant Help You Avoid Common Tax Mistakes?
An accountant can track your deadlines, check your records before anything is filed and point out allowances you may be entitled to. They can also help you plan ahead, so tax bills are less of a surprise.
For a step-by-step look at returns, deadlines and expenses, see our Self Assessment tax return guide.
Need help? Talk to our Blackburn accountants about our tax return service and VAT returns.
Frequently Asked Questions
Missing deadlines, mixing personal and business expenses, forgetting the payment on account, not reclaiming VAT on eligible costs, failing to plan for Corporation Tax and Self Assessment liabilities, and DIY-ing complex areas like R and D or capital allowances.
HMRC charges an automatic £100 for Self Assessment even if no tax is owed, then £10 a day after 3 months (up to £900), and a further 5% of the tax due or £300, whichever is higher, at 6 months. Corporation Tax, VAT and PAYE all carry separate penalty regimes with interest on top.
No. Only wholly-and-exclusively business expenses are allowable. Claiming personal costs (family broadband, non-business meals, personal travel) triggers HMRC adjustments, interest and potential penalties in an enquiry.
Use cloud accounting software, keep business and personal accounts separate, set aside tax as you earn it (20–30% of profit), and work with a qualified accountant who spots issues before HMRC does.
The Bottom Line
Most common tax mistakes come down to missed deadlines, poor records, muddled spending and allowances left unclaimed.
A tax calendar, a separate business bank account, records kept up to date through the year and a little planning ahead can help you avoid them. If you would like a second pair of eyes on your tax, R&R Chartered Certified Accountants can help.
Tax figures checked by Rehan Razzaq FCCA on 8 October 2026 for the 2026/27 tax year.
This article is general guidance for UK businesses and individuals and does not constitute personal financial or tax advice. Rules, thresholds and individual circumstances vary — always confirm your specific position with a qualified accountant before acting.
Rehan Razzaq, FCCA
Founder, R&R Chartered Certified Accountants
ACCA Chartered Certified and Xero Certified Advisor, helping Blackburn businesses and landlords with accounts, tax and financial planning since 2021.
We work with clients right across Lancashire and the North West. If you are looking for accountants in Blackburn, or a local accountant in Chorley or accountant in Preston, our team is a short drive away.
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For the official position, see HMRC’s official Self Assessment tax returns guidance on GOV.UK.
