Being self-employed in Norwich gives you freedom, but it also means HMRC expects you to get your tax right without much hand-holding. Every year, we see sole traders and freelancers in Norwich and Norfolk making the same mistakes — and paying more tax than they need to.
Here are five of the most common ones, and what to do about them.
1. Not Claiming All Your Allowable Expenses
This is the biggest one. Many self-employed people in Norwich either do not know what they can claim, or they know but do not keep the records to prove it.
You can claim expenses that are “wholly and exclusively” for your business. That includes:
- Home office costs — a proportion of your rent or mortgage interest, utilities, and broadband
- Travel — mileage to client sites, parking, train fares (but not your regular commute if you have a fixed workplace)
- Professional subscriptions — trade bodies, professional memberships, relevant publications
- Equipment — laptops, phones, tools, software subscriptions
- Accountancy fees — yes, the cost of getting your tax done is itself tax-deductible
If you are not tracking these throughout the year, you will forget them when January comes around. Use an app like Dext or even a simple spreadsheet to log expenses as they happen.
What this costs you: A self-employed person earning £40,000 who misses £3,000 in valid expenses pays roughly £600 more in tax than they should. Every year.
2. Missing the Payment on Account Trap
Your first year of Self Assessment often comes with a nasty surprise: payments on account. HMRC does not just ask you to pay the tax you owe for the year just gone. They also ask for 50% of next year’s estimated bill, in advance.
So if your tax bill is £3,000, you actually need to find £4,500 in January (the full £3,000 plus a £1,500 payment on account). Then another £1,500 in July.
Many self-employed people do not budget for this. The result is a panicked call to HMRC, a time-to-pay arrangement, or worse — penalties and interest.
How to avoid it: Set aside 25-30% of your profit each month in a separate savings account. Do not touch it until tax time.
3. Mixing Personal and Business Banking
This is not illegal, but it makes everything harder. When your business income and personal spending go through the same account, your bookkeeping takes twice as long and your accountant (or you) has to untangle every transaction.
Open a separate business bank account. Most high street banks offer free business accounts for sole traders. It takes half an hour and saves hours of sorting later.
It also makes you look more professional if HMRC ever opens an enquiry. Clean records signal that you take your obligations seriously.
4. Not Understanding Your VAT Threshold
The VAT registration threshold is currently £90,000. If your taxable turnover goes above that in any rolling 12-month period, you must register for VAT.
The mistake people make is not watching the number closely enough. Your turnover can creep up gradually, and by the time you notice, you are already past the threshold. Late registration means you owe HMRC the VAT on sales you have already made — and you cannot go back and charge your customers for it.
Even if you are well below £90,000, voluntary VAT registration sometimes makes sense. If most of your customers are VAT-registered businesses, they can reclaim the VAT you charge them, so it does not really cost them anything — but you get to reclaim VAT on your own purchases.
Talk to a tax adviser before deciding. The flat rate scheme can simplify things, but it is not always the cheapest option.
5. Leaving Your Tax Return to the Last Week of January
We get it. Nobody wants to do their tax return. But leaving it until the last week of January means:
- You are stressed and rushing, so you are more likely to make mistakes
- Your accountant (if you use one) is at their busiest and least available
- If something goes wrong — a missing P60, a query from HMRC, a technical glitch with the online system — you have no time to fix it
- You do not find out your tax bill until it is due, so you cannot plan for it
File early. You can submit your Self Assessment return from April onwards for the previous tax year. Filing early does not mean you pay early — the payment deadline is still 31 January regardless of when you file. But you know your number months in advance, and you can budget for it properly.
Getting Help Without Overpaying
A good accountant does not have to cost a fortune. For a straightforward sole trader in Norwich, you should expect to pay between £300 and £600 a year for Self Assessment preparation and filing, depending on the complexity of your records.
If you are spending more than that and not getting proactive advice in return, you are overpaying. If you are spending nothing and doing it yourself, you might be leaving money on the table in unclaimed expenses and missed reliefs.
At ATF Accountancy, we work with dozens of self-employed people across Norwich and Norfolk. We keep it simple: we tell you what you owe, why you owe it, and how to pay less of it next year.
If you want a straightforward conversation about your Self Assessment, book a free discovery call. We will review your situation and tell you honestly whether you need an accountant or whether you are fine on your own.
