Around 385,000 people filed their 2021-22 tax returns using paper forms, but it's not the end of the world if you think you're going to miss that cut-off date. You still have until the 31 January to file online returns.
Getting on top of the process now could save you money and stress. Here are six reasons why you might want to file your return early, instead of waiting until the last minute.
1. Time to prepare
HMRC data shows almost 250,000 self-assessment customers filed their 2022-23 tax return in the first week of the new financial year - that's 100,000 more early birds than five years ago.
Of course, not everyone is ready to file that soon, but starting early means you are less likely to make errors. Take your time and start by making sure you've considered all your income sources - from any capital gains to rental income and pensions. You’ll then have a better idea of what you need to declare on your tax return.
If this is your first time filing a tax return, the process can take longer than usual as you’ll first need to register with HMRC.
2. You can avoid costly fines
Try not to leave everything until the last minute, especially if you want to file a paper return, which is due by 31 October.
You won't be fined for missing the paper return deadline, but if you fail to file before 31 January, the tax office may slap you with an initial £100 penalty fine. And the longer you leave it, the higher the penalty.
There are also fines for failing to pay on time. The deadline for payments is also 31 January. The tax office will charge interest from the date the payment was due - that’s now set at 7.75%.
There can be hefty fines for making a mistake as well. Although these are usually reserved for people who have deliberately misled the tax office rather than made careless errors. It's more important you file on time and you can always correct any errors after submission.
Find out more:3. Easier to budget
Because cashflow for many self-assessment customers - especially the self-employed - can be fairly erratic, it can be hard to keep track of how much tax you might actually owe.
Doing your self-assessment early means you know exactly what you will need to pay by 31 January and you can plan your finances accordingly. If you wait until the last minute, you may find you can't pay the full amount owed and could face a fine.
Find out more:4. Get refunds early
If you're self-employed and pre-pay your tax by payments on account, any refunds you're owed by HMRC won’t be processed until it receives your tax return.
By filing several months in advance, when the tax office is likely to be quieter, you might find you'll receive rebates more quickly.
Find out more:5. Unlock extra allowances from previous tax returns
Starting self-assessment now gives you time to check previous tax returns for any unclaimed allowances and reliefs that could reduce your next bill.
You have until 31 January 2024 to tweak your 2021-22 tax return, so if there are any allowances you forgot to take advantage of in the last financial year, this is your last chance to do so. Whether it’s working from home or pension contributions.
Once you’ve filed your 2022-23 return, you can amend it anytime from 72 hours after you’ve filed it until January 31, 2025.
You can claim a refund up to four years after the end of the tax year it relates to, but if you want to amend a tax return for 2020-21 or earlier then you'll need to write to HMRC and make a claim.
Find out more:6. You can seek help if needed
Self-assessment isn’t always straightforward, and if you have questions, you can call the HMRC helpline on 0300 200 3310. Waiting until the end of January to do so however, may mean you are left hanging in a long queue of other stressed customers who’ve also left it to the last minute.
If you're struggling to settle the bill then you may be able to set up a 'Time to Pay' arrangement that lets you pay in instalments over an agreed period. You’ll pay interest on anything owed after the deadline, but at a lower rate than the late payment rate.
Use the Which? tax calculator to file your 2022-23 return
Which?'s online tax calculator tool offers a quick and easy way to find out how much tax you owe.
After inputting your income and outgoings, it can suggest expenses and allowances you might have forgotten - plus, when you're finished, you can also submit your return directly to HMRC.
Find out more:source https://www.which.co.uk/news/article/six-reasons-to-file-a-self-assessment-tax-return-early-aOwG76o8WHD8