We have worked with hundreds of self-employed tradespeople: plumbers, electricians, bricklayers, subcontractors, you name it. We see the same mistakes over and over again. The good news is that every one of them is easy to fix once you know about it. Here are the five biggest, and exactly what to do instead.
Mistake 1: not putting money aside for tax
This is the number one mistake we see, and it causes the most stress. You get paid, you spend the money, and then January rolls around and HMRC wants thousands of pounds you do not have.
The maths
As a self-employed person you will pay income tax at 20% on profits above £12,570 (the personal allowance), plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270. That is effectively 26% on most of your taxable profit.
The fix
Open a separate savings account. Every time you get paid, immediately transfer 25–30% into it and do not touch it. When the tax bill arrives, the money is already there. No stress, no borrowing, no payment plans.
Mistake 2: not claiming legitimate expenses
Most tradespeople under-claim. They do not realise what they can claim, or they do not keep receipts, so they pay more tax than they need to. Commonly missed: tools and equipment, protective clothing (steel-toe boots, hi-vis, hard hats), vehicle costs (45p per mile for the first 10,000 miles, 25p after that), the business share of your phone bill, public liability and tool insurance, trade body subscriptions (Gas Safe, NICEIC, JIB, CSCS renewals) and home office costs under simplified expenses.
The fix
Keep a receipt for everything. Photograph it on your phone the moment you buy it. If it is a genuine business cost, claim it. Every £100 of expenses claimed saves you roughly £26 in tax.
Mistake 3: ignoring CIS statements
If a contractor deducts CIS from your payments, that money is not lost. It is an advance payment towards your tax bill, but you can only reclaim it if you have the statements to prove it. Many subbies glance at them and throw them in a drawer, then cannot find them at tax return time, and miss out on refunds.
The fix
Keep every single CIS statement. Photograph them immediately, file them by month, and give them all to your bookkeeper. Many subcontractors are owed hundreds or thousands of pounds in CIS refunds. Do not leave your money with HMRC. Our free CIS Survival Guide covers this in full.
Mistake 4: missing the 31 January deadline
Late Self Assessment penalties add up fast: £100 the day you are late, £10 per day after three months (up to £900 more), then 5% of the tax owed or £300 at six months, and again at twelve. Potentially over £1,600 in penalties on top of the tax itself.
The fix
Set a phone reminder for 1 December. Two clear months to gather receipts, talk to your bookkeeper and file early. Do not be the person submitting at 11:55pm on 31 January.
Mistake 5: not understanding Making Tax Digital
MTD is happening. Since April 2026, if your qualifying income is over £50,000 you must keep digital records and send quarterly updates to HMRC using MTD-compatible software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. It is based on your gross income, not your profit.
The fix
Check whether you are affected. If you are, choose MTD-compatible software now, start keeping digital records, and get set up before the deadline hits, not after.
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This guide is for general information only and does not constitute professional tax, legal or financial advice. Consult a qualified adviser about your circumstances. Bookkeeping Partner Ltd is registered with the Institute of Certified Bookkeepers.