23rd May 2024Why it pays to complete your tax return early

According to HMRC, nearly 300,000 people filed their self-assessment tax return in the first week of the new tax year. In fact, 70,000 of those customers completed their return on the first day of the tax year.

Trusha Shah, Tax Manager at HW Fisher, explains why filing early has become an increasingly popular trend.

“While a record 11.5 million tax returns were filed on time in the last tax year, 1.1 million individuals still managed to miss the deadline. Each of these people would have been handed an instant £100 fine, and this penalty would have increased if the return had still not been completed after three months. Thankfully, more people are starting to realise the benefits of completing their tax return early. We hope this means less people will make the costly mistake of missing the January deadline.”

Who needs to complete a self-assessment?

You must submit a tax return if you have self-employed earnings or have received untaxed income over £1,000.

However, it is not just the self-employed who must complete their self-assessment tax returns. You will also have to file if you have any untaxed income from:

• money from renting out a property, including through Airbnb
• tips and commission
• income from savings, investments, and dividends
• foreign income

When is the deadline?

Customers can file their Self-Assessment returns for the 2023/2024 tax year between 6 April 2024 and 31 January 2025.

Most people choose to file their returns online. Last year 97% of customers opted to complete their tax return in this way. The deadline for digital tax returns is midnight on the 31^{st of} January 2025.

If you are planning to submit your return via post, the deadline is earlier, and you need to make sure that all your necessary documents arrive to HMRC by the 31st of October 2024.

Non-UK residents are unable to file their own tax returns online. Instead, they must file a paper return by October 31^st deadline or appoint an agent with the approved software to assist with online filing.

What are the benefits of filing early?

By completing your tax return early, you will:

• Avoid the last-minute stress – Gathering paperwork, such as annual statements from financial institutions or estate agents, always takes longer than you think. Starting early means you can collect all the information you need to submit an accurate return and check it thoroughly before submission. If there is something you are unsure about, you have time to seek advice.
• Have a clear picture of what you owe HMRC – This can help with budgeting and allow you the option of setting up a payment plan.
• Find out if you are entitled to a tax refund – For those who are owed money by HMRC, you will also receive your payment sooner if you file early.
• Have a helpful proof of income – This could be especially useful if you are planning to apply for a mortgage or a loan.
• Minimise the risk of paying late filing and payment penalties and charges – Late payment interest is currently charged at 7.75% and repayment interest supplement on any overpayments are at 4.25%.

If you are a non-UK resident, filing early helps to ensure you receive your self-assessment statements from HMRC in good time to make the necessary tax payments (including payments on account). We’ve noticed that some posts are taking at least 3 months to reach customers based in Asia and Australia, which is creating unnecessary stress. Filing early can also help with arranging payments via financial institutions from abroad and managing the costs involved.

Top tips for completing your tax return

• Remember that you can claim tax relief on pension contributions – Keep records of any pension contributions you make to claim the appropriate tax relief.
• Don’t forget to include charity gift aid payments – You will also need the details of all your gift aid payments – for example, have you sponsored a friend to run for charity? HMRC provides some tax relief on charitable donations, which can be included.
• Keep a copy of your completed tax return – If you are employed or a pensioner, keep all paperwork for 22 months after the end of the tax year. Self-employed people or landlords should keep all paperwork for five years and ten months.
• Take advantage of your personal savings allowance – This can be applied to interest earned on your savings. The interest you receive on your savings could be tax-free up to £5,000 per year.

Advice for non UK residents

• Double check you are not paying tax twice – This is particularly important for non UK residents with UK investment properties and who are earning rental income. If your agent is deducting tax at source, you should request the HMRC form NRL 6 (usually issued in July), to ensure you are not paying tax twice.
• Sold a property this year? Watch out for Capital Gains Tax (CGT) – If you are a non-resident who has sold or disposed of UK property or land, you will be required to submit a non-residential Capital Gains tax (NRCGT) return. This needs to be submitted within 60 days of completion. Ensure you inform your tax agent in advance to arrange registration with HMRC including assistance with submission of the NRCGT return. Depending on when the property is acquired and the kind of property (residential/commercial), a market value either in April 2015 or April 2019 may be required to compute the capital gain or loss.

Trusha adds: “If you are new to the UK’s self-assessment, don’t forget that you have to register with HMRC. You should allow yourself plenty of time to complete this registration process as it is taking longer for people to obtain their Self-Assessment Unique Taxpayer Reference (UTR) and Non-Resident Landlord (NRL) numbers.”

If you would like tailored advice for your 2024/2025 tax return, you can contact our tax team here.