Running a small business means wearing every hat. You sell, deliver, chase invoices and keep customers happy. Then, once a year, HMRC expects you to become a tax specialist as well.
For most owners, that is where things go wrong. HMRC expected just over 12 million Self Assessment returns for the 2024 to 2025 tax year, and 11.48 million were filed by the 31 January 2026 deadline. That left roughly half a million people facing penalties. Many of them were sole traders, landlords and company directors who meant to file on time and simply ran out of road.
This article looks at the problems small business owners face most often when dealing with HMRC, what is changing with Making Tax Digital, and how Penny Minders takes the weight off.
The problems small business owners run into
HMRC's rules are not secret, but they are spread across dozens of pages of guidance, and they change often. Most business owners only look at them once a year, under pressure, with a deadline days away. The same issues come up again and again:
- Missed deadlines. Self Assessment returns are due online by 31 January. Company accounts, Corporation Tax returns and Corporation Tax payments all run on their own separate clocks, set by your year end. Juggling several dates for one business is where most penalties start.
- Poor or missing records. Receipts in a shoebox, bank statements mixed with personal spending, and invoices spread across email folders. When records are incomplete, the return is either late or wrong.
- Claiming the wrong expenses. Some owners claim things HMRC will not allow, which invites questions. Many more under-claim, missing legitimate costs like use of home, mileage, professional fees and equipment, and overpay as a result.
- Confusion between personal and company tax. Directors of limited companies often mix up what the company owes and what they owe personally on salary and dividends. Getting the split wrong can mean paying more tax than needed.
- Penalties that stack up. A late Self Assessment return triggers an automatic £100 penalty, even if you owe no tax at all. Further filing penalties follow at three, six and twelve months, and late payment penalties run alongside them.
None of these problems come from carelessness. They come from time. Owners are busy running the business, and tax gets pushed to the bottom of the list until it becomes urgent.
There is also the cost of guessing. When you are unsure whether something is allowable, or whether a letter from HMRC needs a reply, the safe instinct is to do nothing. That often turns a small issue into a larger one. An unanswered HMRC letter about undeclared rental income, for example, is far easier to deal with early than after an enquiry has opened.
Making Tax Digital raises the stakes
The biggest change to Self Assessment in decades is already under way. Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords with qualifying income over £50,000.
The next wave is closer than many people realise. From 6 April 2027, the threshold drops to £30,000, based on your income in the 2025 to 2026 tax year. From 6 April 2028, it drops again to £20,000. Qualifying income means your gross income from self-employment and property before expenses, so a landlord with modest profits can still be caught by high rents.
The return you file before 31 January 2027 is the one HMRC will use to decide whether you join MTD in April 2027.
Once you are in, the workload changes. You must keep digital records in compatible software, send HMRC quarterly updates of your income and expenses, and still complete a final return at the end of the year. For owners who already struggle with one deadline a year, four extra submissions is a real burden.
How Penny Minders helps
Penny Minders exists so that small business owners can stop being part-time tax specialists. We look after the filing, the deadlines and the conversations with HMRC, and you get back to running the business.
Our accountants are chartered, qualified with both the ICAEW and ICAS, and hold public practice certificates from both. Their experience spans KPMG, BDO, Barclays, BNY Mellon and the Co-operative Bank, along with senior roles as Financial Controller and Global Finance Director.
That background matters for a small business. The same discipline used to report for large banks is applied to your accounts, at a scale and price that fits a sole trader, landlord or limited company.
Here is what that looks like in practice.
Every deadline in one place. We track your Self Assessment, Corporation Tax and Companies House dates, and we chase you for what we need well before they arrive.
Clean records without the shoebox. Our accountants are Xero Certified Advisors and QuickBooks Certified ProAdvisors. We set you up on cloud bookkeeping software, so receipts are captured as you go and your records are ready when the return is due.
Every allowable expense claimed. We review your costs line by line, so you claim what you are entitled to and nothing that will draw HMRC's attention.
Ready for Making Tax Digital. We check whether and when MTD applies to you, choose compatible software, and handle the quarterly updates so you are never caught out by the new rules.
Directors and landlords covered. We plan the salary and dividend split for limited company directors, prepare company accounts and CT600 returns, and handle rental income returns for landlords, including disclosures to HMRC if past income was missed.
Get ahead of the next deadline
The 2025 to 2026 Self Assessment deadline is 31 January 2027, and for many sole traders and landlords that return will also decide when Making Tax Digital starts for them. Leaving it until January means less time to gather records, fewer expenses claimed and a higher chance of penalties.
If tax filing keeps landing at the bottom of your list, hand it to someone who keeps it at the top of theirs. Contact Penny Minders today to book a review of your tax position with our accountants.
Sources: GOV.UK, 11.48 million beat the Self Assessment deadline · HMRC manual SALF1440, MTD thresholds