The benefits of filing your tax return early

HM Revenue & Customs (HMRC) is in the process of writing to taxpayers to remind them that they need to file their 2024 self-assessment tax return by 31st January 2025 (or 31st October 2024 if submitting by paper).

But despite HMRC’s best endeavours, taxpayers often put off preparing their tax return until the festive winter period. However, this really doesn’t leave very long to file and pay any tax owed before the January deadline and it’s easy to get distracted by the celebrations and parties.

We highlight the main advantages of filing tax returns early and persuade taxpayers not to drag their heels when it comes to dealing with their affairs.

Tax payments aren’t accelerated

Even if you file your tax return early, you are only obliged to pay any tax liability by the normal due dates:

• 31st January 2025 (balance and the first payment on account - if applicable)
• 31st July 2025 (second payment on account - if applicable) 

... But refunds are accelerated

If you file your tax return before the filing deadline, you should receive any tax refund you may be due fairly soon after you’ve submitted it; HMRC does not wait until 31st January to pay you. Therefore, if you suspect you have overpaid tax and are due a refund, you should really prepare your tax return as soon as possible so that you can get the cash earning interest in your bank account; not HMRC’s.

Better cash flow management

Filing your tax return and calculating any tax liability arising, allows you the time to start planning, saving and managing your cash flow. If you pay your tax bill late, HMRC will charge you interest and possibly even late payment penalties.

The other benefit of filing early is that if your tax liability is under £3,000 and you submit your tax return by 30th December 2024, you can opt to have your tax liability collected through your tax code. This means the tax liability will be deducted from your wages or pension each week/month.

More time to plan for any tax savings

If your affairs have changed this year, for example you've made a significant amount of additional profit, preparing your tax return early can pay dividends because it gives you the time to consider any tax planning opportunities which could lead to tax savings.

Furthermore, having plenty of time to prepare your tax return reduces the risk of errors being made, because you aren’t rushing to get it finished. It also allows time for bank statements to be collected and any other financial documents you may need to file the return.

Accountants may charge more for last minute tax returns

If you plan to use an accountant to deal with your tax affairs, you should be aware that some practices may charge you a premium if you deliver your records to them close to the deadline. Get your records to your accountant earlier, avoid any premiums and take the stress away from a last minute return.

Contacting HMRC can prove tricky at deadline time

Trying to get hold of HMRC can be pretty difficult at times; it’s even more difficult around the tax return deadline. Avoid leaving your tax affairs until the winter; just in case you need to speak with the department and can’t get through.

If you are due a tax refund, you’re also likely to experience a longer turnaround time if you file your return during their peak times.

Late tax returns are liable for penalties

HMRC charge penalties for late tax returns, the initial £100 penalty for late filing is automatic.

If your tax return is more than three months late, £10 daily penalties start to accumulate up to a maximum of £900. A penalty of the higher of £300 or 5% of your tax due is then charged if your return is 6 months late and again if it becomes over 12 months late. And all of these penalties are in addition to one another; rather than in place of. This can mean penalties for late tax returns can top over £1,600.

Helps with applying for Tax Credits

If you are in receipts of tax credit or benefits, your claim needs to be renewed annually by 31st July, which involves letting the Tax Credit Office know of your income. 

While you may submit temporary estimates, it is preferable to submit the actual figures as soon as possible to avoid you being overpaid or underpaid until the Tax Credit Office has received your actual figures.

Using an accountant will take away the stress of filing tax returns and leave you to concentrate on running your business. Not only should penalties and interest be avoided, but accountants may be able to save or defer you tax. They can also keep you informed of your tax position and abreast of any changes in the tax regime.

Need help filing your tax return?

We are available right now to help you complete your self-assessment tax return early so you know how much tax you need to pay and by when. If you are due a refund, it makes perfect sense to receive this as soon as possible.

Call us today on 0141 632 1863 or complete our online form to make that first step.

Date published 31 May 2013 | Last updated 22 May 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.