HMRC recently revealed that the number of self-assessment taxpayers filing their tax returns on the first day of the tax year has more than doubled since 2018, with more than 77,500 customers submitting their tax returns for the 2022/23 tax year on 6 April 2023.
The deadline to file tax returns for the 2022/23 tax year is 31 January 2024, but what are some of the benefits of getting your tax return submitted early?
Planning and budgeting
By filing early it means that you will know exactly how much tax you owe before the deadline.
It gives you time to budget for your tax bill so you can factor it into your costs, rather than wait till the last minute and potentially come up short when it it is time to pay.
Avoid mistakes
When you leave your tax return to the last minute, it can be easy to make mistakes. These can be mistakes in your calculations, by forgetting to include certain income and expenses, or claiming tax relief you are not entitled to because you haven’t had time to thoroughly check the eligibility rules.
Rushing your tax return just to get it submitted in time can land you in hot water with HMRC and mistakes can end up being very costly!
If HMRC finds out that you have not taken ‘reasonable care’ to complete your tax return correctly, they can charge up to 30% of the tax owed.
If you file with plenty of time before the deadline and then realise that there has been a mistake, then you are able to correct it once it has been submitted.
Get your refund back earlier
After you have filed your tax return, HMRC will notify you to confirm whether or not you are due a refund for any overpaid tax.
Processing a refund can take anywhere between 1-8 weeks depending on a number of factors including how straightforward the return is, or how busy HMRC are at the time, which, over the January-February period, in particular, is an extremely busy time and there is likely to be a huge backlog of returns due to be processed.
By processing your return earlier, you will beat the long queue if you are due a refund.
More time to prepare everything you need
A lot of the time spent filing a return is often spent preparing all the documents you need in order to be able to submit your return. This may include invoices, receipts, bank statements, payslips and pension information.
The earlier you start collating this information, the more time you will have to find anything you may have misplaced, or request statements from your bank.
If you have recently set up as self-employed and this is your first return, then filing early is definitely a good option as the setup process can take time.
Before you can file, you’ll need to wait to receive your Unique Taxpayer Reference (UTR number) number through the post, and you’ll also be sent a separate access code to use HMRC’s online services. You will also have to set up a Government Gateway account.
The whole process can take around 2-3 weeks, so getting started as soon as possible will not only save you last minute stress but possibly a fine if you end up missing the deadline!
Avoid missing the deadline/paying a fine
HMRC will issue a penalty if you need to send a tax return and you miss the deadline for submitting it or paying your bill. The longer you leave it, the higher the fine and interest incurred.
You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it’s later, or if you pay your tax bill late.
Submitting your return early will take away the worry of being issued with a fine.
How can Blue Spire help?
If you have never filled in a self-assessment tax return before, the process can seem very daunting.
Check out our Guide to completing your self-assessment tax return to make it easier for you.
We hope this guide will help you to understand your Self-Assessment Tax Return, but it can be a complicated process and easy to overlook something that would save you paying more tax than you need to.
If you would like us to submit your Self-Assessment Tax Return on your behalf, then please do not hesitate to contact us today and we can take care of the whole process for you, keeping you updated and informed along the way.
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