Income Tax Returns: 5 Key Reasons You Should Submit Early

It is rare to find someone who looks forward to completing and filing their Income Tax Returns. For many, and for various reasons, it is usually something they put off for as long as possible.  

The final submission deadline for the Income Tax Returns is 31st January after the end of the tax year, so it follows that for the tax year just ended i.e. 5th April 2024, the return must be submitted by 31 January 2025. For those filing paper Income Tax Returns, the deadline is far earlier, 31 October 2024.  

Whilst we appreciate it is common to put off completion of Income Tax Returns until closer to the deadline, it is important to outline why it might be beneficial to consider filing earlier, leading in some cases, to significant benefits. 

Why Should You Submit Your Income Tax Returns Early?

1. Time to Plan for Tax Payments on Account

Unless your last tax bill was less than £1,000, or you have tax deducted at source of more than 80% of your overall liability, you will be required to make advance payments towards the current year’s tax bill, payable in equal instalments in January and July each year.  By filing your Tax Return before the second payment is due on 31 July 2024, you will readily be able to consider any reduction required to this payment, rather than paying now and having to claim a refund much later. 

For those who have significant changes to their income from one year to the next, it makes total sense to file early, allowing plenty of notice to expected tax liabilities. For example, where income levels have increased, early filing avoids a large balancing tax payment becoming due with just a short window of time left to pay. For cases where the July Payment on Account has already been reduced, confirming your tax liability well ahead of the payment date also prevents the possibility of any over-reduced Payment on Account, on which late payment interest will be charged. 

Quicker Tax Refunds

For individuals who are set to be in a repayment position, an earlier filing means HMRC may process the repayment quicker, particularly before they experience capacity constraints as the filing deadline approaches. Repayments can take longer to process during busy periods, and therefore it is in the interest of those in a repayment position to submit their returns early. 

3.Access to Professional Advice

Tax advisors and accountants are often inundated with last-minute requests as the January deadline approaches. By seeking assistance early, you’re more likely to secure the time and attention of a professional, ensuring your return is carefully reviewed to optimise available reliefs and deductions. Early filing provides the opportunity to take full advantage of tax planning strategies that can minimise your liability. 

4. Avoid Last-Minute Stress and Errors

By taking the time to collate your information and avoiding the rush of an impending deadline, there is less chance that information is missed. Mistakes can be costly and if HMRC discovers that careless errors have been made, they may impose a charge of up to 30% of the extra tax due – more if it relates to offshore sources. And remember, you can always amend your return right up to 31 January 2025. If you file early and then find later in the year that anything was missed from the return, you have plenty of time to change this before the deadline. 

5. Avoid Penalties and Interest

Late filing and payment of your tax return can result in hefty fines and interest charges. HMRC have outlined that the penalty for missing the 31 January deadline is an immediate £100, which increases over time. Additionally, interest is charged on any unpaid tax from the due date until payment is made. By filing early, you ensure you avoid these unnecessary costs. 

If you have any questions regarding your Income Tax Return, please do not hesitate to get in contact with Natalie Butler, or a member of our Private Client Team who would be more than happy to help.