Why it pays to do your UK Self Assessment tax return early

What is a Self Assessment tax return?

A HMRC Self Assessment is a way of reporting your income and paying tax to HM Revenue and Customs (HMRC).

The return covers income from self-employment, rental properties, investments, foreign income or any other untaxed earnings.

Who must file a tax return?

Tax for employees and pensioners is usually deducted automatically from their salaries and pensions. However, individuals with additional income that isn't automatically taxed and exceeds a certain threshold are required to declare it through a Self Assessment tax return.

So, you must submit a tax return if you operated as a sole trader in the last tax year (6 April 2023 to 5 April 2024) and your earnings were over £1,000. This requirement also applies if you were a partner in a business partnership, had a total taxable income over £150,000 a year, had to pay Capital Gains Tax or the high-income child benefit charge, or if you have rental income or foreign income.

Visit HMRC’s tool to determine whether you need to complete a Self Assessment tax return. 

A Self Assessment tax return for 2023/24 can be submitted any time from the start of the new tax year on 6 April until the deadline on 31 January 2025.

The advantages of filing your personal tax return early in the UK 

Quicker tax refunds

Filing early means you’ll find out sooner if you are owed any money. Once your tax return has been processed, you’ll be informed if you are due a refund which can improve your cash flow.

Better budgeting for the year ahead

Knowing how much you owe means you can plan your payment and have a clearer picture of your financial situation. It isn’t necessary to pay your tax bill in one instalment. You can make a budget payment plan with HMRC and make weekly or monthly payments.

Reducing stress 

Tax season can be stressful, especially if you leave your return until the last minute. By filing early, you avoid the last-minute rush and the panic that comes with it.

Proof of income

Lenders often require proof of income, and your tax return serves as official evidence, especially for those who are self-employed or have multiple income streams. You can use your tax return for proof of income for things like mortgage applications, loan applications and benefit claims.

Avoiding any mistakes or penalties

Missing the 31 January deadline for filing your tax return can be costly. Filing early means you will have time to correct any mistakes before the deadline which means you can avoid any potential penalties.

Time to seek professional advice

Early filing allows you to consult tax professionals who can guide you on tax-saving opportunities or adjustments that you might not have considered.

UK tax deadlines

For the tax year of 2023/24, if you were self-employed or a sole trader, you needed to register for Self Assessment by 5 October 2024.

The tax deadlines for submitting paper-based tax returns is 31 October 2024. However, you can still file your returns electronically, with the online submission deadline being midnight on 31 January 2025.

The HMRC reports that for the tax year 2022/23, a significant 96% of tax returns were completed online. This method is preferred as it is safe, straightforward, secure, and accessible around the clock.

How do I find my unique taxpayer reference number?

A Unique Taxpayer Reference (UTR) number is a 10-digit identifier used for you or your business when dealing with HMRC. This code is essential for various tax-related activities, such as claiming tax rebates or submitting a Self Assessment tax return. It ensures HMRC can accurately identify you.

When you register for Self Assessment or create a limited company, you'll receive your UTR through the mail, typically within 10 days of registration. However, it's often accessible earlier via your Personal Tax Account or the HMRC app. The UK government's website also offers a "Find Your UTR" service.

To obtain a UTR number, you'll need to provide:

• Your full name, date of birth and home address
• Your National Insurance (NI) number
• Your email address and phone number
• Details about your business, including its name, address, and type
• Your business phone number
• The date when your self-employment began

Here's how to get your UTR number:

• Register for HMRC online services
• HMRC will send your UTR number by mail
• Register for Self-Assessment with your UTR
• HMRC will send an activation code for your UTR
• Activate your account within 28 days

When filing personal income tax, you'll need your UTR, NI number, and, if applicable, your employer reference. Other documents that may be necessary include your P60 end-of-year certificate, P11D detailing expenses or benefits, P45 showing details of employment cessation and payslips.

Penalties for filing late 

There is a penalty of £100 if your tax return is submitted up to three months late. You’ll have to pay more if it’s later, or if you pay your tax bill late. You will also be charged interest on late payments.

If you are worried that your online access to the HMRC website might not be activated in time to file your tax return by January 31, consider seeking the services of an accountant or tax adviser. They can potentially file the return on your behalf using their specialised agent logins with HMRC.

Why business owners should use an accountant

Although handling your tax return might be cost-effective, business owners often lack either the time or a comprehensive understanding of the various deductions available. As a result, they discover that hiring an accountant quickly offsets its own cost.

Engaging the services of an accountant can take the stress out of filing personal tax returns and assure accuracy in the process.

Tax regulations frequently evolve, so hiring an accountant is an effective strategy to stay up to date. Professional accountants adhere to ethical codes of conduct and ongoing professional development obligations. Additionally, this option provides a safety net in case of errors.

See also: How to choose accountants for your small business

If you need accounting advice or would like us to assist with your Self Assessment tax return, contact us at accounting@sableinternational.com or call +44 (0) 20 7759 7553.