Six reasons why you should file your tax return early

Filing a tax return can be time-consuming and stressful, and despite HMRC’s best endeavours, taxpayers often delay submitting their tax returns until December/January. Continue reading as we highlight the six reasons you should file your tax return early.

It takes time to register

If you have not filed a tax return, you must register for self-assessment. You must register by the 5^th of October in your business’s second tax year. Please be aware you could be fined if you do not.

To register for self-assessment, you will need a Government Gateway ID. If you do not have one, you can create one. You will also need to create a user ID for a business tax account. After registering, you will be sent a Unique Taxpayer Reference (UTR) by post within ten days (21 if you are abroad).

Once you’ve received your UTR, you can sign in to your tax account to activate your self-assessment. You can file your tax return any time before the 31^st January deadline.

The registration process can take up to two weeks in total, but if you wait until the December/January rush (the busiest time for HMRC), it could take much longer.

Tax payments aren’t accelerated, but refunds are

If you’ve overpaid tax during the last tax year, HMRC will let you know you are due a refund when you file your self-assessment tax return. It may take a few weeks to process, but the sooner you file, the sooner you can access any due refunds.

You have more time for cash flow management and tax planning

Filing your tax return and paying your tax bill are two separate actions. Filing your self-assessment tax return early will give you more time to budget for any tax you owe. You can also discuss your tax planning opportunities with a tax advisor and see if you are eligible for any exemptions or reliefs to reduce your tax bill.

Avoid penalties

You’ll face a late filing penalty of £100 if your tax return is submitted even a day past the filing deadline. You will face an additional £10 fine for each day it is late (capped at 90 days). If you still haven’t filed your self-assessment tax return after six months, you’ll be fined 5% of the tax due or £300 – whichever is higher. If you are 12 months late, you’ll be fined an additional £300 or 5% of the tax due, plus the penalties mentioned above.

There are additional fines if you pay your tax bill late. If it’s 30 days late, you’ll receive a charge of 5% of the tax due. You will also receive an additional fine if it is six months late and another penalty if the payment is 12 months late. Filing your tax return early will prevent penalties for filing or paying your tax return late.

It could put you in a better position to access mortgages and other loans

When you apply for a mortgage as a self-employed person, you are required to provide various documents to support your application for a loan, and one of the biggest hurdles is proving your income. As a general rule of thumb, you’ll usually be required to provide at least two years’ worth of accounts to support your application. The sooner you complete and file your tax return, the sooner you’ll have an extra year’s worth of accounts.

Avoid contacting HMRC during their busiest period

Research conducted by Untied the personal tax app found that taxpayers attempting to call HMRC in the run-up to the self-assessment deadline had to wait an average of 11 minutes to get through to speak with an advisor in 2021, which rose to 12.5 minutes in 2022. Filing your tax return before the December and January rush will mean that should you contact HMRC, you will be able to speak to someone regarding your query – and not be kept on hold for long periods of time!

Enlist the help of our expert Personal Tax team today

If you are required to submit a self-assessment tax return, why not enlist the help of our expert Personal Tax team to complete it for you. Our specialist tax team has completed over 25,000 tax returns and will take care of everything for you. From completing the forms and calculating your tax refund or liability to submitting them to HMRC – we will save you hours of time and stress!

If you are interested in our tax return service, please call our friendly team on 01707 871622 or complete the short form on our website.