Tax season is around the corner, and businesses everywhere are getting ready to trawl through their accounts and get their numbers ready for the annual reckoning with HMRC.

Most will wait until the very last minute to send their Self Assessment in. However, we are big fans of early tax filing and encourage you to try it yourself. 

If you are a company director, it is essential to recognise your responsibility in relation to Self Assessment tax returns. Even if you have taken a low or no salary, dividends, or other income from the company, you may still need to file a Self Assessment tax return.

So, if you are wondering, “Can you file your taxes early?,” the answer is yes! As soon as the tax year ends, you can submit your Self Assessment as early as you wish.

There are several advantages to filing your taxes early, and not having to panic about the deadline is just one of them. Let us take a closer look.

HMRC registration takes time

If you are new to Self Assessment and are looking for a more concrete answer to “How early can I file my taxes?” we will say, “As long as it takes to complete all the formalities and get your documents in order”.

Specifically, the formalities involved in getting set up with HMRC – including your Government Gateway online account and your Unique Taxpayer Reference number – can take a few weeks.

You must register by the 5th of October in the second tax year of your business. You want to leave enough time for any delays and extra time to get familiar with how the online portal works.

If you decide to submit paper tax returns instead, you will need to allow for more time to request a paper return and answer any questions HMRC may have about why you are not submitting online.

You can avoid late filing penalties

HMRC does not take kindly to missed tax deadlines, even if it is just by a day. The penalties for late tax filing go all the way from £100 to 100% of your tax bill, depending on how late you are. So, if you are wondering how early you can file your taxes, we would go as far as to say you can never be too early!

You can get your refunds early

If you have completed your tax return and HMRC owes you a refund, early tax filing will ensure that the refund hits your account earlier. And again, getting your money back is always welcome! You can check the HMRC portal to see if a refund is due to you as soon as you have completed filing.

You can set a mechanism for CIS refunds

The Construction Industry Scheme (CIS) often results in contractors deducting money from a subcontractor’s payments, which are then passed on to HMRC. These deductions are treated as advance payments towards the subcontractor’s tax and National Insurance.

When the year ends, the actual tax liability might be lower than the amount already deducted through the CIS. Subcontractors must file a Self Assessment tax return to claim this overpaid tax back. Thus, the Self Assessment is the pathway to getting these valuable CIS refunds, bolstering your cash flow.

You can resolve any queries sooner

It may be human to err, but mistakes on your Self Assessment return could lead to investigations by the HMRC and often hefty penalties.

By completing your taxes early, you can take the time to re-read each page and spot any mistakes, which you might not be able to do if you are filing at the last minute. And that extra time investment now can save you a lot of unnecessary trouble later.

It helps with any mortgage/remortgage applications

An important step for any mortgage or remortgage you plan to take out involves proving your income with the help of an SA302 and HMRC Income Tax Overview. This also holds true for other types of financing, such as student finance, vehicle leasing, or universal credit.

In general, you must display at least two years’ worth of completed accounts. The sooner you complete your early tax filing, the sooner you will have that year’s accounts ready, and the sooner the lenders can process your mortgage/financing application.

You can plan your payments better

Depending on your business cash flow, getting a ready sum of money to pay your tax bill can be difficult at the last minute. With early tax filing, you have enough time to budget the amount you need and set it aside as you go without any stress.

If the bill is too large to pay off at once, you also have the option to reach out to HMRC about setting up a payment arrangement to clear your dues over time. You can also check with your accountant about any tax exemptions or relief schemes you might be eligible for. The less tax you have to pay, the better!

High earners on payroll – A common misconception

Many high earners on a managed payroll system might think, “I’ve already paid tax through PAYE; why should I file a Self Assessment?” Here is why:

  • Additional tax liabilities: If you have other income sources or benefits, like rental income or savings interest, these might push you into a higher tax bracket, leading to additional tax liabilities.
  • Adjustments and claiming reliefs: You might be eligible for certain tax reliefs or need to make adjustments. This cannot be done without filing a Self Assessment tax return.
  • HMRC requirements: Earning over £100,000? The HMRC requires you to file a Self Assessment tax return, even if all your tax is already deducted through PAYE.
  • Child benefit:  If you are in receipt of child benefit and are earring over £50,000 pa, you need to complete a Self Assessment tax return.
Over to you

In conclusion, being on time is always a good idea, and being ahead with a complete and accurate Self Assessment tax return is an excellent idea for your finances and sanity.

So, when you are chalking out your plans for the rest of the financial year, “early tax filing 2023” should definitely be at the top.

Remember that if you need any help, you can always reach out to HMRC, and your trusty accounting partner, Lyel Accountants, will guide you through every step. Good luck!


Rehan Javed

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