Filing your tax return early
For many of us, filing our tax return is something to put off until close to the January deadline. It’s a job that we shelve, whether because it’s complex and time consuming, or we simply have other, more pressing things to think about. But individuals are increasingly filing their Self-Assessments early; indeed over 246,000 submitted their 2022/23 returns in the first week of the new tax year. So what are the benefits of doing this? We take a look…
You could receive your refund early
If you believe you’re due a tax refund because of excessive payments on account or an error in your tax code, filing your tax return early is an obvious choice. That’s because your refund can be processed sooner and issued earlier. Fewer people file early, meaning there’s more capacity at HMRC to get your refund sorted and you won’t wait as long for it.
You have plenty of notice of your bill
Filing your Self Assessment early doesn’t mean you have to pay your bill early. If you submit your tax return in April, you still have until 31 January to make payment. This gives you plenty of time to budget and manage your cashflow so that you can pay the bill comfortably. It also means that if you think you’re going to struggle to pay, you have time to set up a payment plan with HMRC.
You can pay through your tax code
Those owing less than £3,000 in tax can opt to have their bill collected through their tax code. Providing you file your return before 30 December, the payment is spread over monthly installments, easing the immediate pressure on your cashflow.
It’s done and dusted
One advantage of completing your tax return early is simply that it’s done and dusted, leaving you free to focus on your business during the coming year. There’s no rush to gather all the information you need and get the form filled out, then scrabble around for the funds to pay the bill. Instead, you can schedule it in for a quieter time when you have the capacity to give it the attention it needs. This will reduce the risk of errors, which can prove costly and even result in penalties.
You’ll avoid late payment interest
Leaving your Self Assessment to the last minute risks missing the deadline and being issued with an automatic £100 late filing penalty. If payment is made late, you may also incur interest. All this can add up, increasing the overall bill and putting you or your business on the back foot.
You can collect the right amount of tax credits
If you receive tax credits or benefits, the Tax Credit Office needs to know your income so that you can complete your annual renewal on 31 July. While temporary estimates can be submitted, it’s easier to provide the actual figures, so you can avoid being over or underpaid.
Ensure your tax return is completed accurately and filed on time every year with the help of a reputable accountant.
