8 reasons to file Self-Assessment tax returns early

Self-Assessment applies to anyone who is self-employed, company directors, recipients of income from renting out a property or other sources not covered by PAYE, as well as those who receive income from abroad.

The Self-Assessment tax return must be completed annually, and the deadline for submitting the tax return is usually 31st January following the end of the tax year. The tax year runs from 6th April to 5th April the following year.

Many people put off completing their Self-Assessment tax return until closer to the deadline. There are many practical reasons why completing your tax return earlier may benefit you.

Here are 8 reasons why you should file your Self-Assessment tax return early and ensure your tax affairs are up to date.

1. Better understanding of your liability

It's important to file your tax return as early as possible to stay on top of your tax liabilities.

By doing so, you can take advantage of all allowable tax reliefs and avoid last-minute panic, as well as potential interest and penalties from HMRC. 
It's worth noting that if you owe up to £3,000 in taxes, it may be possible to have it collected through your salary or pension, giving you more time to budget for payment. However, filing your return early does not necessarily mean paying your tax earlier. 

Whether you plan to pay immediately or need to set up a payment arrangement, filing your tax return early can help you avoid unnecessary stress and stay in good standing with HMRC.

2. Receive any repayments quicker

If you are due a tax repayment, then submitting your return early will result in you receiving the repayment quicker, which could prove to be particularly useful for cash flow over the summer months.

3. Avoid unwelcome surprises next year

You may be required to make payments on account based on your previous year’s income tax liability. 

Calculating your tax liability early will provide you with more accurate details and knowledge of your upcoming tax liabilities (so that it doesn't come as an unexpected 'surprise' next year). You may also have an opportunity to reduce your payments on account if your income has reduced from the previous year.

4. Get more time for tax planning

Preparing your return early allows time to consider any tax planning opportunities with plenty of time to implement them in time for the following tax year.

5. Benefit your mortgage or remortgage application

If you are planning to buy a house or remortgage your existing property, you are typically required to prove your income by providing an SA302 and HMRC Tax Year Overview.

These documents will show how much income you have declared to HMRC and provide lenders with the information they need to progress your application.

This will also apply to other forms of finance or benefits, for example:

• Universal Credit
• Student Finance
• Loans or vehicle leasing

6. HMRC have only 12 months from submission to open an investigation

HMRC usually have 12 months from the date they receive your completed tax return to open an investigation should they choose to do so. Filing your Self-Assessment sooner means the clock starts ticking earlier. 

Tax investigations can be random or targeted, you can protect yourself by subscribing to our Tax Investigation Service.

7. Enjoy better protection against unknown factors 

If you do not file your tax return information until the last minute, unknown factors such as illness, mislaid information or disruptive weather could add additional stress.

Being organised in dealing with your tax affairs in a timely fashion avoids the further headache of missed deadlines and HMRC interest and penalties.

8. Benefit from wider opportunities

At Shorts, if we get the chance to discuss Self-Assessment with our clients closer to the beginning of the tax year, we are able to have more rewarding, wider discussions about their general financial position, not just tax, and can explore various additional opportunities they may have.

Starting these conversations early means there is more time to assess any issues and put any necessary remedies in place, without running out of time.

How the Shorts team can help

Shorts' tax team file over 1,500 self-assessment returns every year, involving a huge range of income types and client situations. We are always happy to discuss the various ways our team can help you with your submission.

Our Tax Investigation Service also means that, for a small annual fee, we can protect you in the event of an HMRC tax investigation. If selected for an HMRC investigation we will manage the entire process for you, defending you against HMRC, helping you submit all required information, and ultimately minimising the impact it has on your business and personal life. Through our partnership with Professional Fee Protection, our costs incurred defending you against HMRC will be covered up to £100k at no extra cost to you.

If you have anything you would like to discuss with a member of our tax team, we invite you to arrange a free consultation. You can book yours now by completing our online enquiry form.