Every year, thousands of people tell themselves they will sort their tax return early. Every year, a large number of them end up finishing it in the last few days of January, surrounded by half-sorted paperwork and wondering why they left it so late.
The deadline might feel a long way off in October, but the sooner you deal with it, the easier it is. Here is why so many people leave it, what can go wrong when they do and why filing early is almost always the better choice.
Why so many people leave it until the last minute
Leaving a tax return until January is rarely a deliberate decision. It usually happens because:
- The deadline feels far away, so other things take priority
- Gathering the paperwork seems like a big job, so it keeps getting put off
- Christmas and the new year get in the way and January arrives faster than expected
- There is a worry about how much tax will be due, so it is easier not to look
- It is not clear where to start, particularly for anyone with more than one source of income
None of these reasons are unusual. The problem is that putting it off rarely makes the job any smaller. It just means doing it with less time and more pressure.
What the self-assessment deadline is
For most people, the deadline for filing an online self-assessment tax return is 31 January following the end of the tax year. That is also the deadline for paying any tax due for that year, along with the first payment on account for the following year where one applies.
It is worth knowing that the tax year runs from 6 April to 5 April and the return is for the tax year that has already ended. So a return filed in January covers the period up to the previous April.
The deadline for paper returns is earlier, at the end of October, so anyone who prefers to file on paper has even less time than they might think. If you are new to self-assessment, you also need to register with HMRC well before the filing deadline, which is another reason to start thinking about it early.
Common last-minute problems
Leaving things until the final weeks of January tends to bring the same issues up again and again.
- Missing paperwork – documents such as dividend vouchers, P60s or records of income can take time to find, or to request from someone else.
- Not enough time to get help – accountants are at their busiest in January, so leaving it late can mean limited availability.
- Errors from rushing – figures entered in a hurry are far more likely to be wrong, which can lead to an inaccurate tax bill or questions from HMRC later.
- Access problems – logging in to your HMRC account can take longer than expected, particularly if you have not used it for a while and any delay in sorting access eats into the time you have left.
- A bigger bill than expected, with no time to plan. Finding out at the last minute how much tax is due,and that it all has to be paid by the end of January, can put real pressure on cashflow.
Most of these are completely avoidable. They only become a problem because there is no time left to deal with them calmly.
What happens if you miss the deadline
Missing the self-assessment deadline can become expensive. If a return is filed late, HMRC charges a fixed penalty straight away, even if no tax is owed. If the return remains outstanding, further penalties build up over the following months and the amounts can become significant the longer it is left.
Late payment is treated separately. If the tax itself is not paid on time, interest is charged on the outstanding amount, and additional penalties apply the longer the balance remains unpaid.
Penalty amounts and rules can change, so it is always worth checking the current position on the HMRC website or with your accountant. The key point is that it costs far more to be late than it does to be early and in most cases, it is entirely avoidable.
The benefits of filing early
Filing early has some real advantages beyond simply avoiding penalties.
- You know what you owe – having a clear figure well in advance gives you time to set the money aside, rather than finding it at short notice.
- Less stress – a return completed in calm conditions, with plenty of time to check it, is a very different experience from one rushed in the final week.
- More time to fix problems – if something is missing or does not look right, there is time to sort it out properly.
- Better planning – knowing your tax position earlier makes it easier to plan for the year ahead, including payments on account and any decisions about income or pension contributions.
- Faster refunds – if you are owed a refund, filing early means you will receive it sooner, rather than waiting until after the deadline rush.
The tax due does not change based on when you file. The only thing that changes is how much pressure you are under while doing it.
How an accountant can help you get it sorted early
Getting a tax return done early is much easier with some support, particularly if your tax affairs have any complexity to them. An accountant can help by:
- Letting you know exactly what information is needed, so you can start gathering it in good time
- Preparing the return accurately, making sure all allowable expenses and reliefs are claimed
- Dealing with the filing itself, so you do not need to worry about HMRC systems or access problems
- Giving you a clear figure for the tax due, as early as possible, so you can plan the payment
- Explaining payments on account and what to expect for the following year
- Keeping track of deadlines, so nothing is missed
Because accountants are busiest in the weeks leading up to the deadline, getting in touch early also means more time and attention for your return, rather than being squeezed in alongside everyone else.
If you would like to get your tax return sorted well before January, we would love to help. Call us on 01173 700 079 or drop us an email at hello@steppingstonesaccountancy.co.uk and we can talk through what would work best for you.
