The Benefits of Filing Your Tax Return Early

Many taxpayers procrastinate and only tackle their self-assessment tax returns during the busy winter months. But filing your tax return early can offer several advantages. Here’s why you should consider completing your tax return sooner rather than later.

By Adil Mehmood Mir, FCCA

1. Tax Payments Remain Unchanged

Filing your tax return early doesn’t mean you’ll have to pay your tax bill any sooner. You’ll still need to settle your tax liability by the usual deadlines:

• 31st January 2025: Balance of tax and the first payment on account (if applicable).
• 31st July 2025: Second payment on account (if applicable).

2. Accelerated Refunds

Submitting your tax return early can speed up any refunds you might be due. HMRC processes refunds promptly after receiving your return, so you won’t have to wait until the 31st January to get your money back. This means any overpaid tax can start earning interest in your bank account rather than with HMRC.

3. Better Cash Flow Management

Early filing gives you ample time to plan and manage your cash flow. By calculating your tax liability ahead of time, you can start saving and budgeting to avoid any last-minute financial strain. Additionally, if your tax bill is under £3,000 and you file by 30th December 2024, you can opt to have it collected through your tax code, spreading the cost throughout the year.

4. More Time for Tax Planning

Filing early provides an opportunity to assess your financial situation and identify potential tax-saving strategies. If you’ve experienced significant changes in your financial circumstances, early filing allows you to explore ways to optimize your tax position. Additionally, having more time to prepare reduces the risk of errors and allows you to gather all necessary documentation without rushing.

5. Avoid Higher Accountant Fees

Accountants may charge higher fees for last-minute tax returns. By getting your records to your accountant early, you can avoid additional charges and reduce the stress associated with a looming deadline.

6. Easier Communication with HMRC

Contacting HMRC can be challenging, especially around tax return deadlines. By addressing your tax return early, you reduce the likelihood of facing delays or issues with HMRC and ensure your refund processes smoothly. This also helps avoid long wait times if you need assistance or have queries.

7. Avoid Penalties

Late tax returns incur automatic penalties:

• £100 for late filing.
• Additional daily penalties of £10 if the return is over three months late, up to a maximum of £900.
• Higher penalties of £300 or 5% of your tax due if the return is six months late, with another similar penalty if it’s over twelve months late.

Filing early helps you avoid these escalating costs and ensures you meet all deadlines.

8. Helps with Tax Credits

If you claim tax credits or benefits, you need to update your income information annually. Submitting your tax return early ensures your actual figures are sent to the Tax Credit Office, preventing issues with overpayments or underpayments.

Need Help Filing Your Tax Return?

At AMACCOUNTEX LTD, we can assist with preparing and filing your self-assessment tax return early, ensuring you know exactly what you owe and when. If you’re expecting a refund, filing early means you’ll receive it sooner.

Call us today at +44 (0) 744 360 9141 or use our online enquiry form to get started.

This blog is designed to provide general information and should not be considered as professional advice. Consult us for personalized guidance tailored to your specific situation.