Submitting your personal income tax self-assessment return as early as possible makes it less stressful and increases your chance of reducing your tax bill – it’s as simple as that.
And yet, for some reason, every single year, people leave it right up to the wire to submit their tax information to us.
That means, with us pulling out all the stops, they get their self-assessment tax return filed just in time, before the deadline of midnight on 31 January.
Those last-minute returns will still always be accurate, don’t worry about that, but it’s not ideal for a few reasons.
File early to pay less tax
First, a rushed tax return just won’t have as much thought put into it.
There won’t be opportunities for us to do complex calculations or go back and forth asking questions.
That’s important because it’s how we pin down all those business expenses you could be deducting from profit, and work out any reliefs you could be claiming.
Personally, as someone with a bit of a perfectionist streak, I hate submitting tax returns like this. If it was up to me, you’d bring me your tax information for 2020/21 in about, say, May. Then, by the time it goes to HMRC in January, we’ll have wrung out every tax break there is to be found.
But failing that, I’ll take October, or November, or even December. But please, not 29 January.
Secondly, the earlier we calculate your tax bill, the more time you have to prepare for the ordeal of paying it.
That 31 January deadline isn’t only the date for filing your return – it’s also when you’re expected to settle what you owe from your previous tax bill and make the first payment on account towards your current tax bill.
If you don’t pay on time, HMRC will start adding interest and might issue a penalty, based on a percentage of what you owe and how late you pay. It can easily add up to hundreds of pounds.
So, again, you can see how getting this done as early as possible might have its advantages, giving you a chance to put the money aside over the course of two or three months.
Having said that, I also advise clients to keep an eye on this throughout the year and save towards their tax bill as they go. If you’re disciplined about doing that, you might not find year-end too much of a shock.
A more enjoyable Christmas
Finally, if you’ve got family, or just want to enjoy a well-earned break, getting this job out of the way before Christmas makes a lot of sense.
Otherwise, it tends to hang over your head, as one of those jobs you’ll definitely do tomorrow, or next week, until suddenly the deadline is on you.
Every year, HMRC publishes stats for how many people file their tax returns over the holiday. Last Christmas, 2021, there were about 34,000 people who did so between Christmas Eve and Boxing Day, instead of working on the mince pie mountain.
In general, it’s about being in control and getting on the front foot. If stress is caused by feeling out of control, this is one easy thing you can do to counter it.
Get your tax information to us ASAP so we can get your tax return done and dusted well ahead of the 31 January deadline.