6 benefits of filing your personal tax return early

We always contact our clients in early April to encourage them to get their paperwork and information to us within the first few months of the new tax year so that we can prepare their tax return and submit it in good time. This is not simply because we like our clients to be organised. There are significant benefits to filing your personal tax return well ahead of the 31st January deadline. Here are 6 reasons to be prepared and file early:

1. Receive tax refunds earlier

You may be entitled to a tax refund and the sooner you file your tax return, the sooner the money will be back in your bank. Tax refunds can be due for several reasons, such as if you have overpaid a payment on account based on previous income levels or if your tax code has been incorrectly calculated.

2. Budget for bills better

Once your tax return has been submitted you will know exactly how much you need to pay over the coming year. The first payment will be due on 31st January, which is the same date as the deadline for submission, so the sooner you can file it ahead of that date, the more time you will have to put the money aside ready for payment.

3. Give yourself enough time

One of the main reasons for putting filing off is the fact that gathering the documentation together is so time consuming. This task usually involves collating bank statements, receipts, payslips and investment information. Leaving things until the last minute risks you being unable to locate all the necessary paperwork and having to request copies. The sooner you can start the process, the more time you will have to gather everything together.

4. Applying for mortgages and loans

Applying for loans or mortgages can be a long and complex process, particularly when you are self-employed. Mortgage applications for self-employed applicants require an SA302 tax calculation form to be completed as proof of earnings. This means you will need to have completed your tax return for the most recent tax year. If you haven’t yet filed your tax return, it will hold up the application process. It is beneficial to have up to date tax information to hand for any loan application.

5.  Put tax saving strategies in place early

By completing your tax return early in the new tax year, you give yourself as much time as possible to implement tax saving strategies for the current year. Once you know your tax liability for the year that has just ended, it is easier to predict what you will owe for the current tax year too. You can then put in place tax-saving strategies such as paying into a pension or donating to charity straight away and throughout the year.

6. Seek support during quieter times

If you need support or have queries about your tax affairs, it is easier to do this earlier in the tax year. As you can imagine, the HMRC helpline is at its busiest during December and January when the self-assessment deadline is looming. Similarly, if you are applying for copy statements and paperwork, organisations will be busy with similar demands towards the end of the tax year. As your accountant, we are always available to answer queries and offer support whatever the time of year, although we know from experience that it is less stressful for clients if they prepare their tax return early, when there is plenty of time to tie up loose ends.

Finally, we would encourage all our clients to act promptly when they receive their self-assessment checklist from us and the request for documents that we typically send out in April. It is particularly important to act quickly if your affairs have changed and you have noted, or expect to see, losses or significant additional income. Preparing your return early gives you time to consider any tax planning opportunities which could lead to tax savings and gives you time to collate your paperwork and discuss your situation with us.