Why should you prepare your tax return earlier?

As another self-assessment tax return filing deadline passes, a record 11.5 million taxpayers submitted a tax return to HMRC for the 2022/23 tax year. However, out of this figure 778,068 submitted their tax return on the last day and 32,958 submitted within the last hour!

Below are five key reasons as to why submitting your tax return should be done sooner rather than later.

More control over your affairs

By preparing your return earlier you will find out how much tax you owe sooner, allowing time to spread the payment over a longer period and leaving you with no nasty surprises. If it is unlikely that you will be able to pay the tax due, HMRC offer a ‘Time to pay’ arrangement.

On the other hand, if you are due a tax refund you will be receive this earlier, which will help with cashflow throughout the year.

Calculating payments on account

Payments on account are advance payments you make in January and July towards your self-assessment tax bill. This is estimated on how much tax you owe for the upcoming year based on your previous year’s tax bill.

However, if your income is going to be less than the previous year you could claim to reduce payments on account. To be able to calculate this, your tax affairs must be up to date to allow for accurate figures. If the tax planning is done before July, the July payment on account could be reduced.

Making time to register

Submitting a tax return for the first time is not simply a click of a button, you first must register for a UTR (unique taxpayer reference) number. This process can take up to six weeks in HMRC’s quiet period, so this is something you do not want to leave until the final months.

You may need to register for self-assessment if you:

  • Are newly self-employed and have earned over £1,000.
  • Are a new partner in a business partnership.
  • Have received any untaxed income.
  • Are claiming Child Benefit and you or your partner have an income above £50,000.
  • If you earn over £150,000 through PAYE from 2023/24.

Getting your information together

To prepare your tax return you will need information such as P60’s, P45’s and income and expenditure details. Some of this information you may need to request which could cause a delay if submitting right before the deadline.

Peace of mind

By completing early, you will not have the worry of the looming deadline and you can look forward to the current tax year.

Bear in mind you will also get a penalty if you do not submit your return in time. You will pay a late filing penalty of £100 if your tax return is up to 3 months late and further penalties and interest the longer this is left. With an estimated 1.1million people missing the filing deadline for 2022/23 this is unfortunately quite common!

In conclusion, everyone would benefit from submitting their tax return early whether it be for financial planning options or just getting it done for another year. If any assistance is required with personal tax matters, please contact your local Perrys office.