The UK's hotspot for tax errors is London; learn how to avoid a fine

When it comes to paying taxes and avoiding fines, we examine common pitfalls

According to recent data, more people in London than in any other part of the UK have come forward to HMRC to acknowledge they have paid the incorrect tax and to update their records.

A Freedom of Information (FOI) request revealed that 3,296 London residents acknowledged paying incorrect taxes in the year ending March 31, 2025. This exceeds the sum of the other nine largest cities in the United Kingdom.

The number of disclosures made by people "who have not declared the right amount of income tax, capital gains tax, National Insurance contributions, or corporation tax" is the subject of the data. After that, they tried to alert HMRC to the mistake.

BFIA problems nowadays. Paying the wrong amount of tax can result from simple errors. However, paying incorrect taxes can still result in steep fines and, in the case of intentional evasion, which is a crime, incarceration.

Recent Videos From IMG In comparison to London, Manchester (241 individuals admitted they had underpaid taxes), Birmingham (394), and Leeds (150) had significantly fewer voluntary disclosures to HMRC in the year ending March 31, 2025.

The concentration of cases in the capital and its wealthiest postcodes is highlighted by the lower number of voluntary disclosures in other UK cities.

With 492 people coming forward to HMRC to confess to underpaying taxes, South West London leads the list of the top 10 postcode areas.

Anyone who has intentionally or inadvertently underpaid taxes should contact the HMRC as soon as possible, according to Graham Caddock, tax director at the accounting firm Lubbock Fine, which filed the FOI.

"HMRC's sophisticated approach to detecting tax errors using systems like their Connect database is targeting tax evasion more effectively than ever before," Caddock stated. A "

Voluntary disclosures for the tax year 2024-2025 that were sent to HMRC by postcode.

Source: HMRC through a FOIA request.

How to pay the incorrect tax without getting fined.

The best way to avoid or minimize large fines for paying the incorrect amount of tax is to notify HMRC of errors as soon as possible.

"Taxpayers who have intentionally or unintentionally avoided their tax obligations are beginning to realize it is more likely than ever that they will be caught," stated Caddock.

It is more crucial than ever for anyone who has purposefully or unintentionally underpaid their taxes to acknowledge and disclose their mistakes as soon as possible rather than waiting for them to be found out. The "

Typical errors in taxation.

The following are a few typical causes of underreporting tax obligations.

Caddock stated: "With income from side businesses, property, or offshore investments becoming more common and visible to HMRC, the risk of discovery is highly likely. Other self-employed income streams include freelance work, social media influencing, and brand collaborations, which may also go unreported. Income from side businesses, cryptocurrency trading, or offshore accounts, which can be challenging to track and report accurately.

The best way to fix these mistakes before they worsen and result in significant tax penalties is through voluntary disclosures to HMRC. HMRC has the authority to pursue unpaid taxes for up to 20 years. The "

What are the tax penalties imposed by HMRC?

Intentional income tax evasion can result in a fine of up to £5,000 or six months in jail. Serious offenses may result in unlimited fines and a maximum sentence of seven years in prison.

In terms of self-assessment, you will be penalized if you have to file a tax return and submit it after the deadline or if you pay your tax bill after the deadline.

You may be subject to a failure to notify penalty if you register for self-assessment after October 5th and fail to pay your entire tax bill by January 31st. You will receive this penalty within a year of HMRC receiving your self-assessment tax return. It is based on the remaining amount due.

The following late filing penalties will be applied if you submit your tax return after the deadline.

An initial 100 penalty after three months, additional daily penalties of 10 per day, up to a maximum of 900 after six months, an additional penalty of 5 percent of the tax due or 300, whichever is greater, after twelve months, and an additional 5 percent or 300 charge, whichever is greater, if you pay your tax after the deadline.

30 days, 6 months, and 12 months. Interest on the outstanding balance will also be assessed.

BFIA has requested comment from HMRC.