7 reasons to file your Self Assessment tax return early

Although the deadline to submit your tax return to HMRC is 31 January, there are many reasons why it’s a good idea to get organised earlier in the year.

1. Avoid the last minute panic

Leaving the submission to the last minute can cause unnecessary stress of trying to find and send all your tax return information to your accountant. According to HMRC, with 11.5 million Self Assessment returns received by the deadline, the peak hour for filing returns was between 4-5pm on deadline day. 32,958 completed their return at the 11th hour up to midnight on 31 January.

HMRC helplines get extremely busy leading up to the deadline so if you have any issues or queries you may encounter frustration and delays if you leave it too late.

2. Take advantage of tax planning opportunities

An early calculation of your tax position gives you longer to take advantage of tax planning opportunities for the following year. This could include:

• Making gift aid or pension contributions to receive your full personal allowance
• Changing ownership of shares or partnership profits
• Transferring assets to a lower-earning spouse

3. Receive a repayment sooner

You are entitled to a refund from HMRC if you have overpaid tax during the year. If you know you have overpaid, it is advisable to complete your tax return as soon as possible, so that you can claim this refund. Refunds can be held on HMRC’s account as a credit but the interest received is minimal and it is likely that you will receive a better interest rate elsewhere.

4. Plan your payments

By providing your accountant with your tax documents as soon as possible after the tax year-end (5 April), it allows them to calculate your tax liability in advance. Tax payments are due by 31 January following the end of the tax year, therefore the sooner your liability is calculated, the longer you have to save. Those who leave their tax returns until January have little time to find the funds for their tax bills. In addition, late payments may mean that penalties and interest payments become due.

5. Tax code

If you get your information in early, it can have an effect on the way the tax is collected. You can choose to pay your self-assessment bill through your PAYE tax code as long you meet certain criteria set by HMRC. 

To take advantage of this, the following must apply:

• You owe less than £3,000 in tax
• You already pay tax through PAYE
• You submitted your paper tax return by 31 October or your online tax return by 30 December

6. Review your payments on account

If you submit your tax return to HMRC before 31 July, your tax adviser will be able to assess whether payments on account for the following year still need to be made. If your income for the year is lower than expected, you may be able to make a claim to reduce these payments. This could avoid the potential overpayment of tax, or waiting for HMRC to issue this as a repayment to you.

7. Obtaining finance

Lenders will require up to date information so preparing your tax return earlier in the year means that the tax calculation will be available should you need it to obtain or renew a mortgage.  There may be other reasons for needing proof of your income, for example, if you have children applying for Student Finance or for claiming certain benefits.

---

Who needs to file a tax return?

People may need to complete a tax return for the 2023 to 2024 tax year and pay any tax owed if:

• they are a self-employed individual with an income over £1,000
• they have received any untaxed income over £2,500
• they are renting out one or more properties
• they claim Child Benefit and they or their partner have an income above £50,000
• they are a partner in a partnership
• their taxable income earned from savings and investments is more than the £10,000 personal savings allowance
• their taxable income earned from dividends is more than £10,000
• they have paid Capital Gains Tax on assets that were sold for a profit above the Capital Gains threshold

A full list of who needs to complete a tax return is available on GOV.UK.

Anyone who is new to Self Assessment and thinks they might need to complete a tax return for the 2023 to 2024 tax year can use the Self Assessment online tool to check whether they need to register for Self Assessment and submit a return.

Make a ‘new financial year’ resolution

The earlier we receive your tax information, the earlier you can have an up to date position regarding your tax affairs. It will give you time to plan, reduce or increase your savings for your tax liability and avoid the stress of a frantic search for information in January.

If you would like any further advice, please get in touch with a member of our tax team on 01903 234094.