Benefits of filing tax return early

Filing your tax return is often seen as a chore best left until the last minute. However, this mindset can lead to unnecessary stress, potential fines, and even missed opportunities.

The deadline for online self-assessment tax returns is January 31st following the end of the tax year. However, these are the very latest dates for submission of a tax return to avoid penalties. We recommend you start thinking about filing your tax return in September.

Contrary to myths, submitting your tax return earlier does not mean you pay your tax earlier or that HM Revenue & Customs are more likely to enquire into it. However, there are in fact several benefits of filing your tax return early. One in particular is not having the stress of thinking about your tax return at Christmas!

Below we bust 6 myths about filing your tax return early.

Myth 1: There’s No Advantage to Filing Early

Some people believe there’s no real benefit to filing their tax return early. This couldn’t be further from the truth! Here’s how getting a head start can work in your favour:

  • Get Your Refund Faster: Early filers often receive their tax refunds within weeks. HMRC is less busy early on, allowing for quicker processing and potentially putting that money back in your pocket sooner.
  • Reduce Estimated Payments: Did your income decrease compared to last year? Filing early allows you to potentially adjust your 31st of July payment downward, saving you money upfront.
  • Plan Your Finances with Confidence: Knowing your tax liability early lets you plan your budget more effectively for the rest of the year. No surprises, just clear financial planning.
  • Beat the Rush and Avoid Penalties: Filing early eliminates last-minute stress and the risk of costly late filing penalties. Don’t get caught scrambling and potentially facing a £100 fine for a single day’s delay, which increases over time.
Myth 2: Early Filing Increases the Risk of an HMRC Enquiry

One common misconception is that filing your tax return early gives HMRC more time to scrutinise and open an enquiry into your finances. In reality, HMRC has a fixed period within which they can open an enquiry, usually up to 12 months from the date you file your return. Whether you file early, or leave it until deadline day, the length of time HMRC has to review your return doesn’t change. By filing early, you can actually resolve any issues or queries sooner rather than later.

Myth 3: Early Filing Means Paying My Tax Bill Sooner

Filing your return early doesn’t mean you have to pay your tax bill any sooner. Even if you submit your return in April, the payment deadline remains as January 31st of the following year. This gives you ample time to plan and manage your finances. In fact, filing early can give you a clearer picture of your financial obligations whilst giving you time to plan, helping you budget more effectively throughout the year and ensure Christmas spending doesn’t leave you short come deadline day!

Myth 4: Filing Early Increases the Risk of Mistakes

It’s a common fear that filing early might lead to errors due to the rush to get everything done, whilst in reality the opposite is true and leaving it until a last minute rush is more likely to result in errors!  Filing early allows you to take your time and double-check your information without the pressure of an impending deadline. You’re less likely to make mistakes when you’re not racing against the clock. Plus, if any errors do arise, you have plenty of time to correct them.

Myth 5: I only need to know what my tax bill is so I can pay HMRC

While filing your tax return confirms for you and HMRC what your income was and what tax is due, there are other various reasons you need to confirm proof of income and taxes paid. This record can be crucial for various purposes like:

  • Loan applications: Getting a mortgage, personal loan, or student loan often requires proof of income. A filed tax return provides this verification.
  • Benefits: Claiming benefits like Universal Credit may require proof of income and tax paid. A tax return simplifies this process.
  • Education funding: Applying for grants or other educational funding applications might involve showing proof of income. A filed tax return streamlines this requirement.
  • Delays: Filing early avoids delays in receiving funds you need, as you already have income verification readily available.
Myth 6: HMRC are available to help with any queries I have 

HMRC do have telephone helpline and online support for tax return queries. However, filing early has a major advantage: shorter wait times! As the deadline approaches, call volumes surge, leading to longer queues and delays in getting help. By filing early, you can get your questions answered promptly and avoid the pre-deadline rush.

The Real Benefits of Filing Your Tax Return Early

Filing your tax return early offers numerous advantages. You can avoid penalties, minimise the risk of errors, manage your finances better, potentially receive refunds sooner and enjoy peace of mind knowing your taxes are sorted well before the deadline.

Early filing is not only a smart choice, it reduces stress too.

So, next time you think about delaying your tax return, remember: the early bird really does catch the worm!

If you need help filing your tax return and maximising your tax returns, book a free 1-2-1 with us today to find out how we can help you. Email enquiries@a4g-llp.co.uk or call 01474 853 856.

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