Reasons to file your tax return early

Do you need to prepare a tax return for the 2023/24 year? Although the deadline of 31st January 2025 is months away, you can file your tax return any time after 6th April 2024. We can give you seven great reasons to file your tax return sooner rather than later.

You don’t need to pay the tax owed until the tax deadline

A common myth is that once your tax return is filed HMRC will expect you to pay any tax owed. 

Not true. Regardless of when you file your tax return with HMRC, you are only obliged to pay any tax liability by the normal due dates of 31st January (balance and the first payment on account, if applicable) and 31st July (second payment on account, if applicable).

You can use your tax code

Another benefit of filing early is that if you owe less than £3,000 in tax and you submit your tax return by 30th December, you can opt to have your tax liability collected through your tax code.

This can be a great option for employees and pensioners, as having their tax collected from their wages or pension throughout the year eases the pressure on cashflow.

Tax refunds are accelerated

Why wait to receive your tax refund? Once you file your tax return, your refund should be processed soon after. That means the money could be sat in your bank account earning interest sooner. If you wait until January, refunds may take longer to be issued.

Under or over payments of tax can often arise for employees or directors, where HMRC has made errors with their tax codes. Building subcontractors operating under the Construction Industry Scheme are often in a tax refund position.

You have time to plan for any tax owed

Filing your tax return and calculating any tax liability arising, allows you the time to start budgeting and managing you cashflow.

If you pay your tax bill late, HMRC will charge you interest and possibly even late payment penalties.

Collecting the right amount of Tax Credits

If you are in receipt 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 over or underpaid until the Tax Credit Office has received your actual figures.

Buy yourself some time

If your affairs have changed this year, then preparing your tax return in good time ensures you have the space to think about any tax planning opportunities available to you.

Not rushing to complete your tax return should also reduce the risk of errors being made and ensures you include everything possible to get your return correct.

Avoid late filing penalties and interest

If you file your tax return late, you will be issued with an initial, automatic £100 filing penalty. It no longer matters how much tax you had outstanding. If your tax return becomes 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 six months late and again if it becomes over 12 months late. 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.

How TaxAssist Accountants can help

We are available right now to help you complete your 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 01322 553597 or complete our online form to make that first step.

Date published 1 May 2016 | 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.