Why should I file my Tax Return Early?

11.04.2022

Private Client

Why should I file my Tax Return early? 

Another tax year has just ended and we are already starting to plan for the 2021/22 Tax Return season.  Whilst the online filing deadline is not until 31 January 2023, there are a number of good reasons to get your Return filed early: 

1. You will have more time to pull your information together 

We recommend putting all the relevant information in a folder as it arrives, rather than waiting until the last minute to gather your documents.  The longer you leave it, the more likely you are to lose key pieces of information. 

2. You will be better able to obtain professional assistance 

Tax professionals are extremely busy in the approach to the filing deadline.  If you are looking to appoint an accountant for the first time then you may be out of luck if you don’t start looking around until the winter. 

If you already have already engaged an accountant and you provide your information late (and without good reason) then you are likely to be at the back of the queue and run the risk of incurring late filing penalties. 

3. You will avoid penalties 

Filing early should ensure that you avoid HMRC’s late filing penalties. These include:  

• A £100 fine if you miss the 31 January deadline 

• £10-per-day fines (for up to 90 days) if you haven’t filed by 30 April 

• A £300 fine (or 5% of the tax you owe) if you still haven’t filed after another 90 days 

• Another £300 fine (or 5% of the tax you owe) if you still haven’t filed within a year 

There were some changes to the rules and fines in January 2021 and 2022 as a result of the Coronavirus pandemic, but these are unlikely to be repeated. 

4. You will have more time to budget  

The date when you file your Tax Return does not affect the tax payment deadline. If your tax bill is higher than you expected, it’s better to know sooner rather than later so that you can budget accordingly and, if necessary, agree on a payment plan with HMRC. 

5. To receive a tax refund faster 

If you are due a tax repayment, the sooner your file your Tax Return the sooner you can expect to receive a refund. The turnaround time for issuing tax refunds varies and submissions around the Tax Return filing deadline will take longer to process. 

6. To provide financial data  

If you are looking to obtain a mortgage then it’s a good idea to have your finances in order.   Mortgage providers generally require confirmation of your income from the three previous tax years and ask for copies of your Self-Assessment tax computations along with proof of Tax Return submission.  

7. For peace of mind 

Where a Tax Return is filed on time, HMRC has 12 months from the date of submission to enquire into any aspect.  If a Tax Return is filed late then the enquiry period is extended.  So, the sooner your Tax Return is filed, the sooner the enquiry window will end. 

Furthermore, over the years we have seen more enquiries being raised about Tax Returns that are submitted close to the filing deadline.