Spreadsheets are fine — until they’re not.
Many UK business owners start out doing their own bookkeeping. It seems simple at first — plug numbers into a spreadsheet, save receipts in a folder, job done. Right?
Well… not quite.
HMRC doesn’t accept “I thought it was fine” as an excuse for errors. And the truth is, many small bookkeeping mistakes can lead to overpaid tax, lost refunds, fines, or even an investigation.
Here are the most common mistakes people make when doing their own bookkeeping — and how they can cost you far more than hiring a pro in the first place.
Misclassifying Expenses
It’s tempting to just lump everything under “general expenses,” but HMRC doesn’t like vague categories.
If you’re mixing up marketing, office supplies, equipment, and travel all in one pot, you’re increasing the chances of overclaiming or missing out on tax relief.
Why it matters:
HMRC expects you to separate and accurately label costs. If they audit you and your categories don’t make sense, your claims could be rejected.
What to do:
Use simple, consistent categories like:
- Travel
- Subscriptions
- Equipment
- Advertising
Avoid dumping everything under “miscellaneous.”
Forgetting Capital Allowances
Bought a laptop, machinery, or office furniture? You might be able to claim tax relief — but not as a regular expense.
Many business owners forget to claim capital allowances, like the Annual Investment Allowance (AIA), which lets you deduct the full cost of certain assets up to £1 million.
Why it matters:
If you just throw it in as an expense, you might be breaking the rules — or worse, missing out on a big tax break.
What to do:
If you buy anything that will last longer than a year (like tools, furniture, tech), ask if it qualifies for capital allowances.
Bad or No Mileage Records
Claiming mileage? Great. But you can’t just guess or round up.
HMRC requires proper records — that means date, reason for travel, where you went, and how many miles. No, you can’t claim for your commute from home to the office.
Mileage rates for 2025/26:
- 45p per mile for cars/vans (up to 10,000 miles)
- 25p per mile after that
- 24p per mile for motorcycles
- 20p per mile for bicycles
Why it matters:
If you don’t keep a logbook or digital record, HMRC can disallow your claim — even if the trip was real.
What to do:
Use a mileage tracking app or keep a spreadsheet updated weekly. Don’t rely on memory.
No Backups or Proof
Think a bank statement is enough proof? HMRC disagrees.
You need receipts, invoices, and records for every business transaction you claim. If they’re lost or deleted, that expense can be denied — and if there are enough of them, it can trigger an investigation.
Why it matters:
HMRC can look back up to 6 years. If your receipts vanish after 6 months, that’s a problem.
What to do:
- Take photos of receipts and save them in the cloud.
- Use apps or tools that store your data safely.
- Keep both digital and physical copies when possible.
Claiming 100% for Things You Also Use Personally
Phone, laptop, van — if you use it partly for personal reasons, you can’t claim the full cost as a business expense.
Why it matters:
Overclaiming is one of HMRC’s biggest red flags. If they suspect personal use, they’ll challenge it.
What to do:
Estimate your business vs personal use (e.g. 70/30 split) and only claim that portion. Keep notes on how you calculated it.
Not Reconciling Your Books
Let’s say your books say you made £50,000… but your bank says £48,000. That £2,000 could be an error — or a missing invoice — or a major issue waiting to happen.
Why it matters:
Unreconciled accounts mean your records don’t match reality. That’s exactly what HMRC looks for in an audit.
What to do:
Check your bank against your records monthly. Make sure every number lines up — or has a reason why not.
Leaving Everything Until the Last Minute
Waiting until January to deal with your accounts is a great way to forget things, lose receipts, and rush your tax return — which leads to missed claims or wrong entries.
Why it matters:
HMRC penalties for late filing or mistakes can be steep. And rushing only increases the chance of human error.
What to do:
Set aside time each week or month to keep your books up to date. Little and often beats a last-minute panic.
Why These Mistakes Cost Real Money
- You overpay tax
- You miss refunds and deductions
- You risk fines, penalties or HMRC inquiries
- You lose valuable time fixing issues later
- You don’t really know if your business is profitable or not
Even small errors add up — especially over a year or two. And if HMRC opens an enquiry? It’s not just stressful — it’s costly.
What You Can Do Right Now
If you’ve read this and thought, “I’ve definitely done a few of these…” — you’re not alone. Most DIY bookkeeping errors aren’t about dishonesty — they’re about trying to do too much, too fast, without all the rules in hand.
But here’s the good news: you don’t need to guess. We’ve made it easy to check whether your accounts are healthy — or hiding costly mistakes.
It’s a smart, quick tool that looks for common accounting red flags — like missing records, overclaimed expenses, or risky patterns — based on your answers.
