Self Assessment – just hearing the words can bring dread to those required to file a tax return by the 31 January deadline.
According to HMRC, while a record number filed their tax returns before January 2023, 600,000 taxpayers still missed the deadline! That means… a penalty fee – not the best way to kick off a new year!
Whilst Self Assessment season is often thought of as a stressful, painful period, it doesn’t need to be that way.
Well, how do I make it easier, we hear you cry? Our advice is to file early and gather together the information while it’s still fresh in the mind…rather than waiting nine months!
Whether you’re completing your Self Assessment yourself or you have the support of a professional accountant there are many benefits to filing early.
Here are our top eight reasons to file your Self Assessment tax return early:
1. Avoid ‘busy’ season
When you get close to the 31 January deadline, it’s typically harder/slower to get things done. The HMRC phone line becomes jammed with people calling up with questions and queries. It’s safe to say you’ll be on hold for a good while before you get through to someone. The Standard published an article in January 2023 which stated that the average wait on the HMRC Self Assessment helpline in January was 27 minutes.
Our experience is that it’s usually much longer than this.
January can often be a gloomy month following the comedown of Christmas, don’t make it worse by having to listen to the HMRC hold music!
Avoid the stress and aggravation and file early.
2. Time to budget
Most people really value being able to plan and budget throughout the year. The earlier your Self Assessment is filed the sooner you’ll be made aware of the tax you owe. Meaning you’ve got from when you filed to 31 January to prepare and put funds aside.
Nobody wants to be hit with a large debt with little to no time to gather the funds to pay it. What could be more stressful than having to unexpectedly pay out a hefty amount early in the year, when funds will likely already be depleted from Christmas!
3. Potential to reduce payment on account
Payments on account, for those who make them, refer to upfront payments made towards your Self Assessment.
Two payments are made, one on 31 January and another on 31 July – these payments are often based on the tax liability from the previous year.
If having completed your Self Assessment you believe the amount you need to pay is less than the previous year you can contact HMRC about reducing the payment on account.
A very strong reason in favour of getting your Self Assessment filed early!
For more information about payments on accounts you can check out our blog post, Payments of account for Self Assessment: our guide
4. Get any refunds owed earlier
If there’s a chance you’re due a tax refund – let’s say you’ve been on the wrong tax code for a period and are due money back, you’ll get this refund once your return has been filed. It may only take a few weeks from the point the return is filed to receive the money owed!
So, the earlier you file your return, the earlier you’ll receive any money you’re owed! That sure seems like an incentive to file early.
5. Prevent a last minute rush and potential mistakes
We all know that rushing around can lead to mistakes. We’ve all been there before when we’re trying to get something across the line but have forgotten something, mistyped or sent in error.
The more time you allow yourself to gather the correct information needed to complete your return the more likely it is to be right!
If you seek the help of an accountant for your Self Assessment, many will charge an additional fee for having to make amendments once a completed return has been filed. Another reason to avoid a last minute panic.
6. Feel the festive joy
Others you know may well be pulling their hair out about their tax return and worrying about the amount they’ll owe come January. If you file early, you will be able to enjoy the festive season peacefully in the knowledge your return has already been completed and you’ve already budgeted for the amount owed.
You’ll be able to attend those Christmas concerts and festive parties with the rightful smugness that you’ve filed early!
7. Avoid late filing fees
Cutting it too close to the deadline can lead to late filing penalties.
As stipulated by HMRC you’ll get a £100 penalty if your tax return is anywhere from 1 day late and up to 3 months late. The penalty increases if returns are still not filed more than 3 months after the deadline or if you pay your tax bill late.
For more information on Self Assessment penalties head here.
8. Be in the know
The earlier you file, the earlier you’ll have all the information you need to make informed decisions. Ultimately, that is what this is all about. Owe tax? You’ve got time to budget for it. Due a refund? Get the cash now. Struggling to gather the information? Relax, you’ve still got time rather than being up against a deadline.
Being in the know will make your life easier – you’ll avoid surprises and be able to plan better. Who doesn’t want that? Don’t be an Ostrich!
If you’re looking for support with your 2023-2024 Self Assessment tax return, do get in touch.
