What are the 4 key benefits of filing your UK Tax Return early?
We are now into the next self-assessment tax return filing cycle, for the year ending 5 April 2024. Although the deadline for filing these returns is 31 January 2025, there are several compelling reasons for filing your tax return sooner.
In this blog we take a look at some of the key advantages to be had by filing your 2023-24 tax return now…
Benefits of filing your tax return early – secure tax refunds earlier
If you have paid too much tax during 2023-24, it can take some time for HMRC to crunch the numbers and make the appropriate refund.
When you submit your tax return for 2023-24, this triggers an automated reconciliation of the information HMRC hold about your earnings and tax paid – provided by your employer(s) etc. – and the data on the return.
If it turns out that tax payments made are more than they should have been, then a tax refund will be made.
If you delay filing your tax return, after all there is always tomorrow, you may also be delaying your refund. Why leave your hard earned money in the Treasury bank account when it could be in yours?
Benefits of filing your tax return early – determine how much tax you owe
Certainty about the amount of tax and NIC that you may need to pay is information that is best determined as soon as possible after the end of the tax year (5 April 2024).
For example, if your actual income or other taxable gains create a liability above the amounts of any payments on account you may have paid or are payable for 2023-24, this balancing liability will be due for payment on or before 31 January 2025. Let’s say the underpayment is £4,000.
Theoretically, you could complete and file your 2023-24 tax return on 31 January 2025, BUT you would have no time to consider how you were going to fund the £4,000 payment. If you filed your return say June 2024, you would have the best part of seven months to accumulate the £4,000 tax due.
Peace of mind is a key benefit from filing your tax return early
You will probably feel better if your deal with this annual chore earlier in the filing cycle. Certainty about the amount of any tax you may owe, and the knowledge that the job is done for another year, are peace of mind benefits that are worth considering.
Don’t forget tax planning opportunities
In a similar vein, don’t forget that leaving everything to the last minute may disqualify you for any planning changes you could make to mitigate tax payments due. For example:
- Carry-back charitable donations; or
- Elect to have a tax underpayment paid by adjusting your tax code in a future year.
If you are a higher rate income tax payer, investing in an annual tax planning review combined with the early processing of your tax return will provide you with the certainty that you are only paying what you are legally obliged to pay and that you are taking advantage of all the appropriate opportunities to reduce these payments.
Why now book a self-assessment tax return fact-find call now?
Tax planning is what we do. If you believe that your tax affairs are not as tax efficient as they could be, It is not too late to pick up the phone. Let’s have a conversation and see if there would be any value in taking a closer look at your tax affairs.
Is this blog post not relevant to you but you know someone who is regularly commenting that they are paying too much tax or their tax affairs are behind or need reviewing. By all means, please feel free to forward them this email, and please let them know that we would be delighted to help them if they need more information about early bird tax return filing or any other tax related matter.
You can contact us on 020 7870 9050 or email us at hello@rpgcc.co.uk.
