Submitting your Tax Return early: The benefits
1st June 2023
Now that the 5th April 2023 has passed many self-assessment taxpayers will be turning their attention to preparing and submitting their self-assessment personal tax returns for the 2022/23 tax year, which covers the tax year ended 5th April 2023.
Although the filing deadline is 31 January 2024 (31 October 2023 for paper returns) it is important to remember that there are many benefits to preparing your tax return as early as possible. Some of the key benefits are summarised below:
1 – Future tax payments are not brought forward, but tax refunds are
If you submit your return early, the normal due dates for payment remain fixed and are not brought forward. For the 2022/23 tax year these are as follows:
- 31 July 2023 deadline for second payment on account (if applicable).
- 31 January 2024 deadline for balancing payment (if due) and first payment on account for the 2023/24 tax year (if applicable).
Where you submit your 2022/23 self-assessment personal tax return before 31 July 2023, your second 2022/23 payment on account, which is usually estimated will be certain, reducing the risk of late payment interest from further accruing if a claim for reduction has been made.
Conversely, if you are due a tax repayment, HMRC do not wait until 31 January to refund the overpayment. Usually this means that you will receive a tax repayment within just a few weeks of submitting your return.
2 – Collection of tax via your 2024/25 PAYE tax code
In certain circumstances, for the 2022/23 tax year, it is also possible where tax of less than £3,000, which is payable under self-assessment can be collected via a restriction to your 2024/25 PAYE tax code (if you have one and if you pay sufficient PAYE) instead of it being payable as a lump sum by 31 January 2024 , so long as your return is submitted to HMRC by 30 December 2023, potentially assisting with your personal cash flow.
3 – Cashflow
If you submit your tax return early you will have much more time to budget for the 31 January balancing payment, which will avoid any nasty surprises on 31 January.
4 – Time to consider tax planning
Submitting your return early will ensure that there is a higher chance for any proactive tax planning opportunities to be spotted and actioned as soon as possible. This will give you as much time as possible to consider and action relevant tax planning points such as restructuring of assets and income streams, making annual personal pension contributions, charitable donations under gift aid or utilising your ISA allowances.
5 – PAYE tax codes
By submitting your 2022/23 tax return earlier in the cycle, where any incorrect 2023/24 PAYE tax codes for the current tax year are identified, it means these can be corrected earlier rather than much later in the tax year when this may be more problematic and cumbersome to do, potentially impacting on personal cash flows if significant adjustments are required.
6 – Enquiry window will close earlier
HMRC have a period of 12 months from the date that they receive your tax return, provided that it was received on time and a full disclosure made, to open a compliance check into the return. By submitting your return earlier in the year, you will ensure that the enquiry window closes that much earlier than had you submitted your return on 31 January.
Disclaimer - All information in this post was correct at time of writing.
