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“Tax advice is too expensive, I’ll handle it myself.”
It’s a reasonable instinct. If you’re organised, financially literate, and your affairs are straightforward, doing your own tax can feel like an easy win: save the fee, keep control, tick the box.
The problem is that most people don’t stay “straightforward” for long. A promotion brings bonuses. A side business becomes meaningful income. Investments start paying dividends. A rental property appears. A company is formed. Suddenly, your tax position stops being a form-filling exercise and becomes a set of decisions about timing, structure, allowances, and risk.
That’s the point at which DIY tax planning often becomes a false economy. Not because you’re incapable, but because the UK tax system is not designed for intuition. It is technical, layered, and unforgiving of small mistakes. And unlike many life admin tasks, tax errors don’t just cost time they can cost real money, create avoidable HMRC correspondence, trigger penalties, or quietly lead you to overpay for years without realising.
There’s also a more subtle cost. When you handle tax on your own, you tend to focus on compliance, getting the return done, rather than strategy, structuring your financial life so you keep more of what you earn and protect your long-term plan. That difference is why higher earners, business owners and families with assets often find that the real value of advice isn’t “doing the sums”.
To be clear DIY is absolutely fine for many people. If you’re PAYE only with no meaningful extra income, no investments, no property, and no complications, there may be little to optimise. But once you move beyond that, the risk/reward equation changes quickly.
In this article Melissa Henderson, Chartered Financial Planner doesn’t present a scare story. It’s a practical list of the most common ways DIY tax planning goes wrong, not because people are careless, but because they underestimate complexity and overestimate how easy it is to stay compliant and efficient at the same time.
“Most people don’t realise that the greatest tax risks aren’t dramatic mistakes, they’re small, well-intentioned decisions made in isolation that quietly compound into significant, irreversible costs over time.”
- Melissa Henderson, Chartered Financial Planner
1) You Overpay Tax... Quietly... for Years
The first danger of DIY tax planning is also the least dramatic: you simply pay more than you need to. There’s no letter from HMRC. No fines. No crisis. Just a slow leak of wealth through missed allowances, poorly structured income, and tax wrappers that aren’t being used optimally.
This often happens because DIY tax focuses on reporting what occurred, not shaping what could have occurred. You might declare dividend income correctly, for example, but miss the opportunity to hold dividend-generating investments inside an ISA. You might contribute to a pension, but not realise that higher-rate relief needs reclaiming (depending on the scheme type). You might have a spouse with unused allowances, yet never consider legitimate inter-spousal asset transfers that reduce the household’s overall tax burden.
Overpayment is particularly common when circumstances change: a pay rise pushes you into a new band, a bonus nudges you into the personal allowance taper, or investment income grows beyond basic allowances. Without a forward-looking review, you can drift into tax inefficiency and stay there for years.
The uncomfortable truth is this: HMRC won’t ring you to say you could have structured things better. If you miss a relief you were entitled to claim, that money simply stays with the Treasury.
2) You Underpay Without Meaning To - and HMRC Doesn’t Care Why
The second danger is the opposite problem: you underpay tax, not through deliberate behaviour, but through misunderstanding, incomplete records, or a reasonable-but-wrong interpretation of the rules.
This is where DIY becomes risky. Tax law has nuance. What counts as an allowable expense depends on context. How income is categorised matters. Property rules are not the same as business rules. Investments have their own mechanics. And once you move beyond PAYE, it’s surprisingly easy to make an error that HMRC sees as a lack of “reasonable care”.
The consequence is not just paying the tax you owed. It can include interest and penalties and those penalties can be material. Even when mistakes are accidental, HMRC can still charge penalties if they conclude you didn’t take appropriate care.
The deeper cost is psychological. Once you’ve had one “HMRC surprise”, future tax planning becomes more stressful. You start second-guessing everything. You lose confidence. And you may become even more avoidant which increases the likelihood of errors again next year.
3) You Get Caught Out by Deadlines and “Payments on Account”
Most people know the big Self Assessment date: 31 January. What many don’t fully appreciate until it happens is the cashflow sting of payments on account.
Payments on account are effectively advance payments toward the next tax year, usually triggered if your Self Assessment bill exceeds a threshold. In practice, this means that in January you might not just pay last year’s tax you could also be asked to pay a significant portion of the next year’s bill upfront and then again in July.
For DIY filers, this is a classic shock. The tax is “right”, but the timing feels brutal, especially for business owners, consultants, and those with variable income. If you haven’t planned cash reserves for it or set aside tax as you go you can find yourself paying a large bill at precisely the time of year when other expenses also peak.
This is where DIY tax planning stops being a numbers exercise and becomes a cashflow and resilience issue. The problem isn’t tax itself; it’s that without forecasting; the bill arrives like an ambush.
4) You Miss the Big Tax-Year-End Opportunities That Expire on 5th April
The UK tax system is built around annual allowances that do not roll forward. Once the clock strikes midnight on 5 April, any unused capacity is gone for good. Pension annual allowances, ISA subscriptions, capital gains exemptions, dividend allowances, gifting allowances are all reset and what you didn’t use, you’ve lost.
DIY tax planning often focuses on what has happened rather than what could still be done. By the time most people look at their position, the window for meaningful action has narrowed. Carry-forward calculations may not be ready. Cash may not be positioned. Investment or business decisions may need more time to execute cleanly.
The result is that people either do nothing, assuming it’s “too late to bother”, or they rush through sub-optimal decisions simply to say they’ve “used the allowance”. Neither approach is strategic. Both quietly destroy long-term value.
“The UK tax system rewards those who plan ahead, not those who react at the deadline. Once an allowance is lost, it is gone foreve, and that is where DIY planning often proves most expensive.”
- Keely Woods, Chartered Financial Planner
5) You Misunderstand What Really Counts as an Allowable Expense
For self-employed individuals and company directors, the rules around allowable expenses are far more nuanced than most realise. What feels “obviously business-related” is not always deductible. What is deductible often depends on how it is structured, documented, and justified.
DIY filers commonly fall into one of two traps:
- They either claim too little, missing legitimate reliefs and inflating their tax bill, or
- They claim too much, exposing themselves to HMRC challenge and potential penalties.
Both outcomes stem from the same issue: interpreting complex rules without professional context.
The danger is not just financial. It’s reputational and emotional. An enquiry, even when resolved, consumes time, attention and energy. And once scrutiny has occurred, future filings tend to feel far more stressful than they need to.
6) You Trigger Avoidable Capital Gains Tax
Capital gains tax is one of the most misunderstood areas of personal taxation. The matching rules, the treatment of bed-and-breakfasting, spousal transfers, loss offsetting, and the interaction with income tax bands create a landscape where small timing errors can have large cost consequences.
DIY investors often sell assets in the wrong order, in the wrong tax year, or in the wrong ownership structure. They may crystallise gains unnecessarily, fail to harvest losses effectively, or overlook the opportunity to rebalance portfolios within tax-sheltered wrappers.
Once a gain is triggered, it cannot be undone. The tax liability is fixed. What could have been a carefully sequenced, low-tax transition becomes an irreversible, higher-tax event.
7) Property Tax Rules Catch DIY Planners Out Again and Again
Property is one of the most common areas where DIY tax planning quietly goes wrong. The rules around buy-to-let, second homes, furnished holiday lets, incorporation, and principal private residence relief are intricate and constantly evolving.
Many people assume that property is “simple” because it feels tangible. In reality, it sits at the intersection of income tax, capital gains tax, inheritance tax, stamp duty, and sometimes corporation tax. Decisions about ownership structure, financing, gifting, or selling can have six-figure tax implications over time.
Without professional guidance, it is easy to crystallise avoidable capital gains, lose reliefs, or structure ownership inefficiently between spouses or family members. Once a transaction completes, the tax outcome is fixed and often far more expensive than it needed to be.
8) You Rely on Online or AI Advice That Is Generic, Outdated or Flat-Out Wrong
Search engines, forums, social media and even AI tools can provide information, but they cannot provide context. Tax is intensely personal: your income mix, family structure, residence status, business interests, and future plans all affect the correct answer.
DIY planners often piece together guidance from multiple sources, assuming that what applied to “someone in a similar situation” applies to them. Small differences in facts can completely change the tax treatment.
The danger is false confidence. You may feel informed, but still be operating on rules that are outdated, misunderstood, or inapplicable. When HMRC challenges a position, “I read it online” is not a defence.
9) You Increase Your Risk of HMRC Enquiry - and the Stress That Comes With It
Returns prepared without professional oversight are statistically more likely to contain inconsistencies, rounding patterns, missing disclosures, or unexplained relief claims are all red flags for HMRC’s risk-profiling systems.
An enquiry is not just a technical process. It is emotionally draining, time-consuming, and intrusive. It can run for months, sometimes years. Even when no wrongdoing is found, the experience often leaves individuals far more anxious about their finances than before.
When you work with a regulated adviser or accountant, your filings are reviewed through a compliance lens. There is professional judgement behind each position taken, and professional indemnity insurance behind any error. On your own, the entire burden, financial and emotional rests with you.
“An HMRC enquiry is rarely about wrongdoing; it’s about uncertainty. Professional oversight dramatically reduces both the likelihood of scrutiny and the stress that follows when questions are raised.”
- Luke James, Chartered Financial Planner
10) You Optimise for This Year’s Tax, Not Your Lifetime Wealth
Perhaps the biggest hidden cost of DIY tax planning is short-term thinking.
Most people focus on “reducing this year’s bill” rather than structuring their affairs across decades. They overlook how today’s pension strategy affects inheritance tax tomorrow. How ownership decisions affect future business exits. How income extraction today shapes retirement income and legacy planning later.
Professional tax advice is not about form-filling. It is about sequencing decisions across time, aligning tax, investment, estate planning and cashflow so that wealth compounds efficiently and transfers cleanly across generations.
Without that joined-up view, people often make individually reasonable decisions that collectively undermine long-term outcomes.
“Tax planning is not about this year’s return — it’s about protecting lifetime wealth. The difference between tactical filing and strategic advice can mean generations of impact, not just a smaller bill in April.”
- Ellie Pemberton, Financial Planner
The Real Cost of “Doing It Yourself”
Tax advice only feels expensive when it is viewed as a fee rather than as a form of risk management and value creation.
The real costs of DIY are usually invisible at first: Missed allowances, lost reliefs, sub-optimal structures, unnecessary stress, irreversible mistakes.
By the time the impact becomes obvious, the opportunity to fix it has often passed.
For straightforward, salaried affairs, self-assessment software may be perfectly adequate. But as soon as your life involves business ownership, investments, property, family wealth planning or cross-border considerations, tax stops being a form and becomes a strategy.
And strategies, by their nature are rarely best left to chance.
A Thoughtful Next Step…
If this article has prompted you to question whether your current approach is truly working as hard as it could for you, a quiet, exploratory conversation with our financial planning specialists can often bring clarity. Sometimes, simply understanding your options is the first step towards making more confident, more informed decisions for the years ahead. Feel free to contact us when the time feels right.
Disclaimer: This article does not constitute financial advice. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals. Financial markets may go up or down, and you are not guaranteed a return on your investment. Past performance is not necessarily a guide to future performance.
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