Common Tax Return Mistakes for Self-Employed Individuals, CIS Workers, Landlords & Those with Foreign Income

Donatas Mendelis
Jun 24
3 min read

Updated: Jul 12

By Accountant Bookkeeping Ltd

In this guide: Discover the most common tax return mistakes made by self-employed professionals, CIS subcontractors, landlords, and UK residents with overseas income. Learn how to avoid penalties, reduce overpayments, and file with confidence.

1. Missing Income from All Sources

Under the UK’s Self-Assessment system, all taxable income—regardless of source—must be declared. Omitting even small or foreign income can lead to penalties or HMRC inquiries.

Commonly missed income includes:

Freelance or side work paid via PayPal, Stripe, or Wise.
CIS subcontracting income without deduction statements.
Rental income (UK or overseas), especially from jointly owned property.
Foreign pensions, dividends, or bank interest—even if tax-free abroad.
Platform-based earnings (e.g. Etsy, Gumroad, Kindle).

Tip: Use bank feeds, contractor summaries, and foreign tax reports to cross-check all income. HMRC receives international data under global transparency agreements.

2. Claiming Ineligible Expenses

Only expenses that are wholly and exclusively for business use are allowable. Misjudging this is a common trigger for compliance checks.

CIS & Self-Employed Workers: Tools, PPE, and client travel are valid. However, commuting from home to a fixed site—even by van—is not. Claiming petrol without business mileage logs is a red flag for HMRC investigators.
Landlords: Only mortgage interest is deductible—not capital repayments. Renovations must be capitalised and cannot be claimed as repairs.
Foreign Income Earners: Bank interest that’s tax-free abroad (e.g. in Germany or Luxembourg) is still taxable in the UK under the arising basis.
All Categories: Avoid blanket claims for broadband, mobile, or home office use without clear apportionment.

3. Not Offsetting CIS Deductions Properly

CIS subcontractors often overpay tax by failing to report deductions already made at source.

Common errors:

Reporting net income instead of gross.
Omitting CIS deduction certificates.
Misunderstanding that reimbursed materials aren’t taxed—but must still be itemised.

Tip: Declare gross income and include all CIS tax withheld. This ensures accurate liability and speeds up potential refunds.

4. Misreporting or Omitting Foreign Income

Foreign income must be declared using the SA106 form—even if it’s tax-free in the source country.

Mistakes to avoid:

Not converting income to GBP using HMRC’s exchange rates.
Forgetting to claim Foreign Tax Credit Relief.
Incorrectly applying the remittance basis.

Tip: Keep foreign tax certificates and declare all overseas income—even if it never enters a UK bank account.

5. Overlooking the Property Income Allowance

If your rental income is under £1,000, you may qualify for the property income allowance. But once you exceed that, you must register and file—even if you’re claiming the allowance.

Tip:

Use SA105 for UK property.
Use SA106 for overseas property.
Declare your share of jointly owned income, even if someone else manages the property.

6. Missing Deadlines or Overpaying Payments on Account

Missing deadlines can lead to costly penalties. Here are some important dates to remember:

Online filing deadline: 31 January.
Payment on account (if applicable): 31 January and 31 July.

Payments on account are based on the previous year’s tax bill. If your income has dropped, you may be eligible to reduce your July payment.

Tip: File your return before 31 July to request a reduction. If you can’t pay in full, HMRC offers Time to Pay arrangements to spread the cost.

7. Filing Without Professional Support

DIY tax software can’t always handle complex scenarios like:

CIS deductions.
Foreign income reporting.
Property allowances.
Director payroll or CT600 alignment.

Tip: A qualified accountant ensures accuracy, maximises reliefs, and handles HMRC correspondence—saving you time, money, and stress.

Understanding the Importance of Accurate Reporting

Accurate reporting is essential for maintaining compliance and optimising your tax situation. Mistakes can not only lead to fines, but they can also result in audits and payment delays.

If you are unsure about what you need to declare, it’s always advisable to consult with a professional. They can guide you through the intricacies of tax law.

Whether you are self-employed, a landlord, or someone with foreign income, knowing your obligations is crucial.

Final Word from Accountant Bookkeeping Ltd

Whether you’re a freelancer, subcontractor, landlord, or UK resident with overseas income, accuracy matters. One mistake can lead to penalties, delays, or missed refunds.

Need help with your tax return? We specialise in Self Assessment, CIS support, foreign income reporting, and property tax compliance.