Submitting your tax return early— what are the benefits?

As the 2023/24 tax year has ended, filing their self-assessment tax return should now be in taxpayers’ thoughts. Unfortunately, many taxpayers feel they still have plenty of time and so put it on the backburner. Unbeknown to those taxpayers, they’re potentially missing out on an array of advantages!

Reducing your July payment on account

One of the biggest advantages of filing your tax return before 31 July is that this payment on account. which is based on your 2022/23 tax liability can be reduced if your 2023/24 tax liability is lower than previously anticipated. Perhaps you retired from work? Or increased gift aid or pension contributions? There are many reasons why your tax liability may be lower than first thought. 

Budgeting for your tax liability

By passing us your tax return information early in the year, we can calculate your tax liability; giving you plenty of notice before it needs to be paid. We’ll also be able to advise you of any potential payments on account due for the 2024/25 tax year or if only a balancing payment in January 2025 will be needed.

Get your refund quicker!

On the other hand, if your payments on account were overestimated, or you were taxed too much at source, we can request a repayment of overpaid tax on your tax return which can often be quicker than submitting a separate claim. The earlier we can do your return, the earlier you’ll get your repayment.

Adjustments to your PAYE code

You could have your tax liability taken at source in 12 equal instalments from your employment or pension income if you submit early.  This may suit you better from a cash-flow perspective as it defers the payment of tax, so you won’t feel the effects until well after the usual payment deadline. We can help check that you are eligible for this and advise on how this will impact you.

Did you know?

HMRC’s stats suggest that a whopping 1.1 million taxpayers missed the 2024 January deadline, so many taxpayers clearly leave their tax returns to the last minute and a large number miss the deadline altogether. The initial late filing penalty is £100, and HMRC may charge late tax payment interest from the first day the tax payment is late on top of this.

Misconceptions – myth or fact?

• Submitting a tax return early means I’ll have to pay tax earlier.

Myth – The due dates will remain the same, but you’ll have more time to prepare to make the payment.

• Making payments on account means I’m paying more tax to HMRC.

Myth – Payments on account will accelerate your tax payments, but you won’t end up paying any more tax. Your payments are based on your tax liability for the prior year. If you end up having less income in the year or a lower tax liability for another reason, you might receive a refund. If you end up with a higher tax liability than last year, you will have a balancing payment of tax due on 31 January 2025, but this will be reduced by the payments you’ll have already made.

Need help?

Don’t let yourself fall into the trap of submitting your tax return late. If you’d like us to help with your tax return,  please get in touch with your usual Larking Gowen contact. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, you can call us on 0330 024 0888 or email enquiry@larking-gowen.co.uk.

Chloe Griner