April 20, 2024

10 Common Tax Filing Mistakes and How to Avoid Them


Each year, countless UK taxpayers do their best to file their taxes properly and on time.

Yet, despite their best efforts, mistakes are more common than many realise, often leading to unnecessary stress, potential fines, and missed opportunities to maximise savings. 

Whether you're a seasoned filer or doing it for the first time, you need to be familiar with the common missteps and learn how to sidestep them if you want to reduce the possibility of making them in the future.

And this is the reason for this blog post, I’ve been able to put together a list of 10 common tax filing mistakes taxpayers in the UK often make when filing their taxes. From overlooked deductions that could save you money to the perilous consequences of missing deadlines, we'll cover all the bases. 

I’m also going to arm you with practical strategies to avoid these errors, ensuring you can make it through the tax season with confidence. 

So, grab a cup of tea, settle in, and let's demystify the tax filing process together.

What are the common tax mistakes?

Common tax filing mistakes include failing to report all income sources, overlooking eligible deductions and tax reliefs, misunderstanding tax codes, submitting inaccurate or incomplete tax returns, and missing critical deadlines.

Other frequent errors encompass overclaiming expenses, neglecting to plan for Payments on Account, ignoring changes in tax legislation, attempting DIY tax filing without the necessary expertise, and underutilizing digital tools and resources. Each of these mistakes can lead to unnecessary stress, financial penalties, or lost savings.

However, with careful planning, diligent record-keeping, and staying informed about tax laws, taxpayers can navigate their way to a successful and stress-free tax-filing experience.

1. Failing to Report All Income Sources

One of the most common slip-ups in tax filing is the oversight of not reporting all income sources.

In the hustle and bustle of daily life, it's easy to overlook or underestimate the significance of various income streams. 

The UK's tax system, however, requires a comprehensive account, encompassing everything from your primary employment wages to side gigs, rental incomes, dividends from investments, and even occasional freelance work. 

Tax Strategy Audit & Planning
Tax Strategy Audit & Planning

So the key to avoiding this common mistake lies in meticulous record-keeping and organisation. Here are some important areas you want to look at when filing…

  • Employment Income: Ensure P60s and P45s from all employment within the tax year are accurately reported.
  • Self-Employment: Track and report earnings from freelance or business activities, no matter how small.
  • Investments: Dividends, interest from savings, and income from trusts must be declared.
  • Property Income: Rental income, after allowable expenses, needs reporting, even from short-term lettings.

2. Ignoring Eligible Deductions and Reliefs

Equally crucial, yet often overlooked, are the deductions and tax reliefs designed to mitigate your tax liability

These financial leeways are akin to lifelines, specifically crafted to lighten your tax burden, yet many taxpayers miss out on them either due to unawareness or misconceptions about eligibility. 

It would do you well to check into the following areas for deductions and reliefs before filing…

  • Work-Related Expenses: Claim deductions for unreimbursed expenses related to your job, like professional subscriptions or necessary equipment.
  • Charitable Donations: Donations made through Gift Aid allow you to claim tax relief, enhancing the value of your charitable contributions.
  • Pension Contributions: Contributions to pension schemes are eligible for tax relief at your highest rate of income tax, significantly reducing your taxable income.
  • Savings Allowance: Don't forget the Personal Savings Allowance and Dividend Allowance, which offer tax-efficient ways to grow your savings.

3. Misunderstanding Tax Codes

The alphanumeric jumble of tax codes assigned to individuals often leads to confusion and misunderstanding. 

These codes are not arbitrary; they dictate how much tax is to be deducted from your income, making their accuracy paramount. A mismatch or outdated code could result in overpaying tax or, conversely, accumulating tax debt unknowingly.

To address this challenge;

  • Check Your Tax Code Annually: Ensure it reflects your current situation, accounting for any changes in employment or income sources.
  • Understand the Basics: Familiarise yourself with what different elements of your tax code mean, such as the numbers reflecting your tax-free allowance and letters indicating any adjustments or deductions.
  • Query Discrepancies: If something seems amiss, or you've had multiple jobs within a year, it's crucial to contact HMRC promptly to rectify any errors.

4. Inaccurate or Incomplete Information on Tax Returns

When it comes to tax filing, accuracy is your best ally. Inaccurate or incomplete information on tax returns doesn't just risk immediate corrections and delays but can lead to audits, penalties, and unnecessary stress. 

The pitfalls of inaccuracies range from simple typographical errors in personal details to omitted income streams or incorrectly calculated deductions. 

Tax Returns

The ripple effect of these mistakes can unsettle even the most meticulously planned financial landscapes.

Hence, I recommend taking the following precautions to help mitigate inaccuracies;

  • Double-Check Personal Information: Confirm your name, National Insurance number, and address are current and correct.
  • Comprehensive Income Reporting: Review all sources of income, including investments and savings, to ensure nothing is missed.
  • Accurate Deduction Claims: Only claim deductions and reliefs you're eligible for, and have evidence to support these claims.
  • Use HMRC's Checklists: They provide useful guides to ensure you've covered all necessary information.

5. Missing Deadlines

The ticking clock towards tax filing deadlines is a sound familiar to UK taxpayers. 

Missing these deadlines is a costly mistake that leads to automatic penalties, additional charges, and accruing interest on any unpaid tax. 

The key to avoiding this pitfall is understanding not just when the deadlines fall but also the preparation required to meet them comfortably. This should help;

  • Mark Your Calendar: Note the submission deadline for online returns (January 31st) and the payment deadline for any tax owed.
  • Early Preparation: Begin gathering necessary documents and information well in advance of the deadline.
  • Consider Payment Timeframes: Ensure you allow enough time for payments to clear, avoiding last-minute technical glitches or processing delays.

6. Not Utilising Digital Tools and Resources

In today's digital age, ignoring the technological tools and resources at your disposal can make tax filing unnecessarily challenging. 

HMRC's digital services, authorised tax software, and online calculators are designed to streamline the tax filing process, offering accuracy, convenience, and peace of mind. 

  • HMRC Online Services: Register for and use HMRC's online portal to file returns, view liabilities, and manage payments.
  • Authorised Tax Software: Leverage software to help organise financial information, calculate tax liabilities, and submit returns directly.
  • Online Calculators and Tools: Use them to estimate taxes, check tax codes, and understand how different income sources impact your tax bill.

7. Overlooking Changes in Tax Legislation

The UK tax legislation is ever-evolving, so staying abreast of changes is crucial for ensuring compliance and optimising your tax position. 

Tax laws are subject to frequent updates, which can introduce new reliefs, alter rates, or modify filing requirements. Ignoring these changes can lead to missed opportunities for tax savings or, conversely, unexpected liabilities. 

Tax Legislation

It’s akin to navigating without a map; without current knowledge, you may find yourself unwittingly off course. 

Here are some areas you might want to keep up with to avoid running with old information;

  • Annual Budget Announcements: Pay attention to the Chancellor's budget speech, often held in the spring, for major tax changes.
  • Regularly Review HMRC Updates: HMRC's website and newsletters are primary sources for legislative updates and guidance.
  • Professional Seminars and Webinars: These can provide insights into complex changes and how they might affect you.
  • Engage with Professional Bodies: Associations related to your profession often provide summaries and analysis of how tax changes affect their members.

8. Do-It-Yourself (DIY) Tax Filing When Professional Help Is Needed

While DIY tax filing can seem appealing for its perceived simplicity and cost savings, it's not always the best route, especially for those with complex financial situations. 

High net-worth individuals, property landlords, and business owners may face intricate tax scenarios that require nuanced understanding and strategic planning beyond the scope of a layperson’s expertise. Recognising when professional help is needed can save you from costly mistakes and maximise your tax efficiency.

Here are some instances where you might want to seek professional help;

  • Complex Financial Portfolios: If your income streams include investments, foreign income, or rental properties, consider consulting a tax professional.
  • Major Life Events: Changes such as marriage, divorce, starting a business, or retirement significantly affect your tax situation and planning.
  • Recent Legislation Changes: If there have been recent changes in tax legislation, especially those affecting your finances, professional guidance can ensure compliance and optimization.
  • Peace of Mind: Perhaps the most compelling reason to seek professional advice is the assurance that your tax affairs are in expert hands, allowing you to focus on other aspects of your life or business.

9. Overclaiming Expenses and Reliefs

One of the more nuanced aspects of tax filing involves accurately claiming allowable expenses and reliefs. 

It's tempting to try and minimise taxable income by maximising deductions, but overclaiming can lead to scrutiny from HMRC and potential penalties.

I recommend the following to help address this;

  • Understanding Allowable Expenses: It’s vital to thoroughly understand which expenses are allowable for deduction. For instance, for the self-employed or those running a business, expenses must be wholly and exclusively for the purpose of the trade.
  • Accurate Record-Keeping: Maintain detailed records of all expenses, including receipts and invoices, to substantiate claims. This documentation is crucial if HMRC requests evidence to support your deductions.
  • Relief Eligibility: Similarly, ensure you are fully eligible for any tax reliefs you claim, such as Marriage Allowance or Working from Home Relief. Misunderstanding the eligibility criteria can lead to erroneous claims.

10. Neglecting to Plan for Payments on Account

For Self-Assessment taxpayers, not understanding or planning for Payments on Account can result in unexpected cash flow issues. 

Payments on Account are advance payments towards your tax bill, based on your previous year’s tax liability, and are due in two instalments each year.

Some best practices include;

  • Anticipating Payments: If your tax bill is over a certain threshold and less than 80% of your tax was collected at source, you’ll likely need to make Payments on Account. It’s crucial to budget for these payments to avoid surprises.
  • Adjustments for Fluctuating Income: If you anticipate a significant change in income, you can apply to adjust your Payments on Account. This requires a good understanding of your current financial year and careful planning to avoid underpayment or overpayment.
Best Tax advisor in UK
Best Tax advisor in UK


So, there you have it – ten common tax mistakes and how to gracefully sidestep them. 

Navigating the complexities of tax filing doesn't have to be daunting.

By being aware of common mistakes, understanding the importance of accurate information, and taking advantage of available deductions, you can make the process smoother and more efficient.

Remember, when in doubt, seek professional advice to ensure your tax affairs are in order. 

Here's to a stress-free tax filing season!

Meet Omar

Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn.
Book a call today to learn more about what Omar and ASWATAX can do for you.

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