5 Expensive Tax Return Errors Small Business Owners Commit

5 Expensive Tax Return Errors Small Business Owners Commit

July 6, 2025

Tax Return Errors Small Business Owners Commit (and How to Prevent Them)

By Faisal Shahzad | Tax Return Assist Ltd

Every year, many business owners in the UK submit their self-assessment tax returns. Unfortunately, a significant number of them end up paying more tax than necessary or facing penalties from HMRC due to a few avoidable mistakes. Whether you are a sole trader, a company director, or a landlord, here are five common errors we often see in tax returns, along with tips on how to avoid them.

1. Missing the Deadline

This is the most apparent — and the most expensive. Submitting your return after the deadline of 31 January results in an automatic fine of £100. The penalties escalate quickly if you procrastinate further. Prevent it: Set a reminder, or even better, engage a tax agent to file early.

2. Claiming Incorrect Expenses

A significant number of small business owners either underclaim allowable expenses or, worse, claim non-allowable expenses such as personal clothing or meals. Prevent it: Familiarize yourself with what HMRC permits (e.g., office supplies, business travel, marketing) and maintain accurate records.

3. Not Reporting All Income

HMRC cross-references income sources (e.g., dividends, rental income, or earnings from eBay side hustles). Neglecting to report these can raise suspicions. Prevent it: Maintain comprehensive income records and declare all sources — including side income.

4. Forgetting to Claim Use of Home as Office

If you operate from home, you are likely eligible to make a claim — even if it is merely a small flat-rate amount. Prevent it: Claim either the HMRC flat rate or a portion of expenses such as heating, internet, and electricity.

5. Filing Without Professional Review

While online tax software may assist, it cannot identify the subtle reliefs and deductions that a qualified tax agent can. Prevent it: Having your return reviewed (or completed) by a tax professional often proves to be a worthwhile investment. Final Thoughts Submitting a tax return can seem overwhelming — but it need not be. Whether you are a freelancer, property investor, or side hustler, the right support can make the process seamless, compliant, and more tax-efficient. If you require assistance with your tax return,

Final Thoughts