There is nothing worse than the dread of your tax return looming over you as you kick off the Christmas period. Last year, HMRC reported that 22,060 individuals submitted their self assessment form online between Christmas Eve and Boxing Day. On 31 January 2023, 861,085 customers filed online in a last ditch attempt to meet the deadline, of which 36,767 filed in the last hour. But if doesn’t have to be that way.
Aside from peace of mind, there are a number of benefits to submitting your self assessment tax return as soon as you have your required information available. For some of our clients, we estimate that they are in possession of their necessary records as early as June – that means that their tax returns can be tied off three months after the year-end.
In this blog, our Tax Manager Helen Williams highlights 10 reasons to submit your return early:
1. Advance notice of tax position
Submitting your tax return early doesn’t mean you are required to pay your tax bill early! The tax will still be due in January, however you will have plenty of time to budget for the payment. Alternatively, your tax bill may be a pleasant surprise, allowing you to book a holiday or make an investment. Either way, the advance notice will help you plan your finances and cash flow better.
2. Making repayments
If you are in a repayment position you will be able to claim your refund sooner rather than later.
3. Reduce July payments on account
If your tax liability has reduced from the previous tax year, you may be able to reduce or even remove your July payment on account.
4. Improving the current year’s tax position
Knowing your tax position enables us to advise you of your likely tax bill and plan accordingly. Early submission allows sufficient time to provide advice where there are unusual or new transactions and could improve the current year’s tax position.
5. Tax code amendments
The earlier we know your tax position, the earlier we can check your tax code is correct and, if not, amend accordingly. If you wait until January to provide us with your records, you may find that you have been under paying tax for 9 months prior and be faced with a large tax bill.
6. Proof of income
Your tax return provides you with proof of income. You’ll need this if you apply for a mortgage, loan, or if you need to access certain benefits and schemes such as Tax-Free Childcare.
7. Early deadlines for liabilities <£3,000
If your liabilities are less than £3,000, your tax can be collected through your PAYE tax code. This is only feasible where your tax return is submitted before 30 December.
8. Make your calendar year work for you
If you know a particular month is going to be busy for your business or you’re planning to take time off then you can factor this in and get your return out of the way so that you can be fully focussed on your calendar commitments rather than looming deadlines.
9. Avoid penalties
You may have to pay interest and a penalty if you do not file and pay on time.
10. Avoid the rush
January is HMRC’s busiest month so if something goes wrong and you need to contact them, you might find it hard to get through.
How can you get ahead?
- Start gathering your documents as soon as possible. You may be waiting for dividend payments later in the year, but that doesn’t prevent you from collating all your other paperwork so that it’s ready to go.
- If using a tax adviser, submit your documents as soon as you have them, preferably in a digital format.
- If you’re not sure what documentation you need, ask your personal tax professional for help. We provide our clients with a handy checklist which you can download here.
Questions about your tax return?
If you have questions relating to your self assessment, contact Helen Williams or Claire Drummond in our personal tax team on 0161 905 1616 or email email@example.com.