The tax mistakes to avoid

Most tax problems come from a handful of avoidable mistakes. Each guide explains the mistake, why it matters, a real example, how to fix it and how to make sure it does not happen again.

Self Assessment mistakes

The Self Assessment errors we see most often, why they cost money and how to put each one right.

Avoid this

VAT mistakes

The VAT errors that cost businesses money, why HMRC notices them and how to keep your returns clean.

Avoid this

VAT registration mistakes

Checking turnover only at year end, registering late and choosing the wrong scheme are the VAT mistakes that turn a milestone into a costly surprise, and each is easy to sidestep.

Avoid this

Director loan mistakes

The director loan errors that lead to extra tax, why they happen and how to keep the account in order.

Avoid this

Dividend mistakes

The dividend errors that turn a tax efficient choice into a problem, and how to pay them properly.

Avoid this

Payroll mistakes

Most payroll errors come down to timing, tax codes, pensions and paying HMRC late, and all of them are avoidable with a steady routine.

Avoid this

CIS refund mistakes

Most subcontractors lose money on their CIS refund through missing statements, unclaimed expenses or using the wrong route, and each one is fixable.

Avoid this

Bookkeeping mistakes

Mixed money, missing receipts and leaving the books until year end are the three habits that turn bookkeeping into a problem, and all three are easy to change.

Avoid this

Expense claim mistakes

Claiming personal costs you cannot, keeping no records to back up what you do claim and missing genuine business expenses are the mistakes that cost you tax in both directions.

Avoid this

Company accounts mistakes

Late accounts, wrong figures and a forgotten confirmation statement are the company accounts mistakes that cost directors money and stress, and every one is avoidable.

Avoid this

Landlord tax mistakes

Most landlord tax errors come down to mortgage interest, the line between repairs and improvements, and the 60 day deadline for reporting a property sale.

Avoid this

Making Tax Digital mistakes

Using profit instead of gross income to check the threshold, leaving software too late and clinging to paper records are the Making Tax Digital mistakes to avoid as the rules arrive.

Avoid this

The five that cost the most money

The list above covers a lot of ground. If you only read one section, read this one, because these five account for most of the money we see lost.

Registering for VAT late. The threshold is £90,000 of taxable turnover on a rolling 12 months, checked monthly, not at your year end. Register late and you owe VAT from your effective date whether or not you charged it. On consumer sales that comes straight out of money you have already spent.
Letting a directors loan account go overdrawn. Still overdrawn 9 months and 1 day after the year end and the company pays section 455 tax at 35.75% for loans made on or after 6 April 2026. Refundable, but slowly.
Paying dividends the company has not earned. Dividends come out of post tax distributable profit, not the bank balance. Get it wrong and it is not a dividend, it is a loan, with the charge above attached.
Filing late when there is no tax to pay. The £100 penalty applies even on a nil return, and daily penalties of £10 start at three months. A year late with nothing owing still costs £1,600.
Not putting the tax aside. Your first January can carry the balancing payment for the year just gone plus the first payment on account for the year you are in, roughly one and a half years of tax at once.

The mistakes that come from out of date advice

A surprising number of errors are not carelessness, they are people acting on guidance that was correct two years ago. Four are worth naming.

Dividend rates changed on 6 April 2026. The ordinary rate is now 10.75% and the upper rate 35.75%, each 2 percentage points higher. A lot of published advice still shows the old figures.

Cash basis has been the default since 2024/25 for sole traders and partnerships, and the old turnover limits, interest cap and loss restriction have all been removed. Guidance describing it as a restricted option for tiny businesses is out of date.

The employee working from home relief was withdrawn on 6 April 2026. Employees cannot claim it for 2026/27. Employers can still reimburse £6 a week tax free.

The mileage rate rose to 55p for the first 10,000 business miles from 6 April 2026, after 15 years at 45p. Employers still paying 45p are leaving their staff with a claim.

The mistakes of omission

Money left behind is harder to notice than money paid away, but it counts the same.

Pre registration VAT. On your first return you can reclaim VAT going back 4 years on goods you still hold and 6 months on services. Regularly missed.
Higher rate pension relief. In a relief at source scheme the extra 20% is not automatic. You have to claim it.
Overlap relief. It had to be used in 2023/24 and cannot be used after. A rushed return that year may have under claimed it.
The annual inheritance tax exemptions. £3,000 a year, carried forward one year only. Unused, they simply disappear.

What actually prevents all of this

Almost every mistake on this page traces back to one of three habits. Not looking at the numbers often enough, so problems are found months late. Not separating business money from personal money, so nothing reconciles. And not setting tax aside as it accrues, so the deadline becomes a cash flow crisis rather than an administrative task.

Fix those three and the rest largely takes care of itself.

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