Self assessment taxpayers who plan to submit paper tax returns have just two weeks left before the 31 October deadline. But do not worry, even if you miss this deadline, because you will still have time till 31 January 2025 to file it online.
Perhaps because of this extra time given for online filing, the number of people filing their Self Assessment Tax Returns by paper has dropped by more than a quarter since 2021. Currently, 97% of tax returns are submitted digitally.
Why Should You File Your Tax Returns Early?
Even though online filers have some extra time on their hands, it is still beneficial for them to file their tax returns early. Here are five strong reasons making the case for you to file sooner rather than later.
1. Avoid Last-Minute Rush
Whether you are filing your Self Assessment Tax Return online or on paper, starting early allows you to gather everything necessary for an accurate result without rushing or risking errors. The major documents include your National Insurance number, Unique Taxpayer Reference (UTR), P60 if employed, receipts, invoices, bank statements, tenancy agreements, student loan details and benefit information. Be sure to account for all income, not just earnings from employment. Taxes may also apply to saving interest, pensions, dividends, and capital gains.
2. Adequate Time to Budget
Filing your tax return early means you will know how much you owe well before the deadline. You are waiting until the last minute may leave you short and at risk of fines.
3. File Early for a Faster Tax Refund
You can claim a tax refund up to four years after the end of the related tax year, but HMRC will not process it until you have first submitted your tax return. Filing early, when HMRC is less busy, increases the chances of receiving your refund sooner than filing during a peak period like late October or January. HMRC offers a step-by-step guide where you will specify what you overpaid on and answer questions to determine your eligibility.
4. Avoid Penalties and Claim Allowances
Missing the paper return deadline will not result in a fine, but failing to file by 31 January could lead to a £100 penalty. You may also be charged an interest of 7.5% from the day your tax payment was due. The longer you delay, the higher the penalty and interest. Similarly, HMRC may also issue penalties for errors, with fines depending on the type and gravity of the mistake.
However, completing your tax return early gives you more time to claim tax reliefs and allowances and potentially lower your bill. You have until 31 January 2025 to amend your 2023/24 return and up to four years to claim refunds, though changes for 2021/22 or earlier must be submitted in writing to HMRC.
5. Get Help and Guidance
If you find the process difficult or have any questions, contact HMRC at 0300 200 3310. You can also seek help from the UKPA and our expert team and access our online resources, including blogs and eBooks. You can also visit our YouTube channel.
Conclusion
Filing your tax return early offers numerous benefits, from saving time and stress to avoiding penalties and getting refunds quicker. Take action now to ensure a smoother tax season.
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