7 Mistakes You're Making with Tax Returns for the Self-Employed

Let’s be honest: nobody starts a business because they’re excited about filling out tax returns. Whether you’re a freelance graphic designer in London or a plumber in Kent, the annual "Self Assessment shuffle" is usually the least favourite part of your year.

At Accountant Search, we talk to hundreds of self-employed people every month. The one thing we’ve noticed? Most people are making the same handful of mistakes that end up costing them time, stress, and: most importantly: hard-earned cash.

With the 2026 tax year bringing some of the biggest changes to UK tax law in a generation (looking at you, Making Tax Digital), there’s never been a better time to clean up your act. Here are the 7 biggest mistakes you’re probably making with your tax returns and how to fix them before HMRC comes knocking.

1. Missing the "Hidden" Deadlines

Most people know the big one: January 31st. It’s the date burned into every freelancer’s brain. But if you only think about your tax on January 30th, you’ve already missed several "hidden" deadlines.

For example, did you know you have to register for Self Assessment by October 5th in your second tax year of business? Or that if you want HMRC to collect your tax through your PAYE tax code (if you also have a job), you usually need to file online by December 30th?

Missing these doesn’t just lead to a £100 fine; it creates a rush that leads to errors. And errors are what trigger HMRC audits.

2. Guessing Your "Allowable Expenses"

This is where most people leave money on the table: or accidentally commit "tax evasion lite." HMRC has a simple rule: an expense must be "wholly and exclusively" for the purpose of your trade.

Common errors include:

• The "Everything is Business" Trap: You can't claim your entire mobile phone bill if you spend half your time scrolling TikTok or calling your mum. You need to apportion it.

• The "Work Clothes" Myth: Unless it’s a specific uniform or protective gear (like steel-toe boots), you generally can’t claim for your "work" suit or everyday jeans.

• Missing the Home Office: If you work from home, you can claim a portion of your heating, electricity, and even rent. Many people skip this because they think it’s too complicated.

3. The "Shoebox" Record Keeping Method

Still keeping receipts in a shoebox (or a cluttered email folder)? You’re living dangerously. Not only is it a nightmare to calculate your totals, but HMRC requires you to keep records for at least five years after the January 31st deadline.

If you lose a receipt for a £500 piece of equipment and get audited, HMRC can disallow that expense. That’s essentially you paying tax on money you already spent. In 2026, bookkeeping services aren't just for big firms; they are essential for even the smallest sole trader to stay compliant.

4. Mixing Business and Personal Finances

This is the cardinal sin of self-employment. Using your personal bank account for business transactions makes your tax return ten times harder than it needs to be.

When you look back at a transaction from nine months ago labeled "Amazon - £42.99," was that a new toner cartridge or a birthday present for your nephew? If you can’t remember, you can’t claim it. Or worse, you claim it, and HMRC asks for proof. Opening a dedicated business bank account is the single best gift you can give your future self.

5. Ignoring "Making Tax Digital" (MTD)

If you haven't heard of MTD yet, consider this your wake-up call. Starting in April 2026, many self-employed individuals with income over £50,000 will be required to keep digital records and send quarterly updates to HMRC.

Gone are the days of the once-a-year panic. You’ll need online accounting software that "talks" to HMRC. If you’re still using a handwritten ledger or a basic spreadsheet, you’re going to find yourself on the wrong side of the law very soon.

6. Forgetting About "Payments on Account"

This is the one that causes the most "tax return tears." If your tax bill is more than £1,000, HMRC assumes you’ll earn at least as much next year. They ask you to pay half of next year’s estimated tax upfront in January, and the other half in July.

Many newly self-employed people save up exactly what they owe for the previous year, only to realize they actually need 150% of that amount to cover the "payment on account." It’s a cash-flow killer that a qualified accountant could have helped you plan for months in advance.

7. The "DIY" Hero Complex

We get it. You’re an entrepreneur. You’re scrappy. You want to save money. But doing your own tax return to save a few hundred pounds is often a false economy.

A professional accountant doesn't just "fill in the boxes." They find legal ways to reduce your tax bill that you didn't know existed. They ensure you’re claiming every penny of your SME tax services allowances. Most importantly, they act as a buffer between you and HMRC.

If you’re based in a specific area, finding someone local can be a game-changer. Whether you need accountants in London, accountants in Milton Keynes, or accountants in Surrey, having a pro in your corner means you can spend your time growing your business instead of squinting at tax codes.

Final Thoughts

Tax doesn't have to be a nightmare. By avoiding these seven common traps, you’ll stay on HMRC’s good side and keep more of your money in your pocket.

Ready to stop guessing and start growing? Don't wait until January. At Accountant Search, we make it simple to compare accountant services and find the perfect match for your business. Tell us what you need, and we’ll connect you with experts who can handle the heavy lifting for you.

Author: Sam