10 Reasons Why You Should File Your Self-Assessment Early

A lot of people dread filing their tax returns and end up delaying it as much as possible. Whilst the main thing is that the tax return is filed before the 31st of January, here are 10 reasons why you should file your self-assessment early.

Avoid penalties

The key reason to complete your self-assessment early is to ensure you do not incur any late filing penalties. A large percentage of individuals leave filing their self-assessment to the last few days, if not hours, before the filing deadline. This is risky as you could ultimately end up with computer issues which would delay submission.

You’ll have to pay a late filing penalty of £100 if your tax return is not filed on, or before, 31 January. If your tax return is then subsequently filed it’s later than 3 months, the penalty will increase and interest will also be charged on late payments.

It takes time to register

Submitting your self-assessment is not just done with a click of a button. Some people forget or are not aware that you must register first before you can submit a return. If this is done off-peak the registering process can take about two weeks but this will increase if you wait until January. Once registered, you will receive a unique taxpayer reference (UTR) by post.

You need various forms of the paperwork ready

In order to successfully file your self-assessment you may require P45s, P60s, expenses, invoices, bank statements, and more. If you leave your tax return until January to file, you will need to ensure you have collated all records from the previous tax year. If you need to request copies from employers/banks it may take time to receive hence better to file as earliest as possible.

Provides peace of mind

The end of December and the new year is a busy and hectic time. Knowing you have completed your self-assessment before the end-of-year rush will mean you can start your year focusing on other areas of your business rather than doing paperwork.

It doesn’t affect payments

Some believe that if they submit their self-assessment “early”, they will have to pay any tax due early too. Any tax payable in that tax year will need to be paid on, or before, the 31st January regardless of when the tax return was actually submitted.

Provides you with more options

If you already pay tax through PAYE and you owe less than £3,000 in tax, you may have the option to adjust your tax code and collect the tax due through monthly payments via your salary. This is an interest-free way of splitting the payments which may be a better option for you. It is important to note that your tax return will need to be submitted online before the end of December. Therefore, having your self-assessment done early provides you with more financial options.

Avoid getting caught in the backlog

If you are due a tax refund, this could be delayed if your self-assessment is caught up in the post-January back log. If you submit your tax return early enough you can expect to receive your refund faster.

Avoids mistakes

If you leave it to the last minute you are more likely to make mistakes. Not giving yourself enough time could lead to missing information which may be costly and lead to fines that could have easily been avoided.

Contact HMRC

There are some cases where you will need to contact HMRC if you have a query. In January, there will inevitably be long queues on the phone due to the sheer number of people trying to do the same thing. Starting your self-assessment early will limit the amount of time you spend in annoying phone queues.

Helps for loans

If you are applying for a loan or a mortgage you will often be asked for proof of income. For those that are self-employed, you are required to provide your SA302 together with a supporting tax year overview. This is only available from HMRC once your self-assessment has been submitted.

Getting your self-assessment filed early just makes sense. The topics discussed are just some of the reasons why getting it completed early makes not only good business sense but will most importantly avoid unnecessary stress.

If you have any questions about the self-assessment process then please get in touch with the Wright Vigar team.