The number of taxpayers reaping the advantages of early tax returns has doubled since 2018, but over 860,000 still leave it to the last minute, says leading tax and advisory firm Blick Rothenberg.
CEO of the firm, Nimesh Shah said: “The number of people filing early is less than 10% of those leaving it to the last minute and filing on 31 January but over three times the number filing during the Christmas period (between 24 December and 26 December).”
A report by HMRC has revealed that more than 77,500 customers submitted their tax returns for the 2022 to 2023 tax year on 6 April 2023, compared to almost 37,000 customers on 6 April 2018. Aside from avoiding the stress of filling out returns as the clock ticks closer to a penalty, early filing has other rewards.
Nimesh said: “Filing your tax return early has lots of advantages, including receiving any repayment sooner, being able to reduce to your 2nd payment on account due in July and planning your tax cash flow for any future tax payments. Just because you file your tax return early doesn’t mean you have to pay any 2022/23 tax liability now, and you will have until 31 January 2024.”
He added: “If you are likely to have difficulty paying a future tax liability, filing early gives you visibility of the amount that will become due and the opportunity to approach HMRC to agree a payment plan – HMRC are likely to be inundated with payment plan requests nearer the deadline, and won’t agree to an arrangement if the tax return hasn’t been filed.”
Nimesh said: “Other benefits of filing early include reducing the time HMRC has to raise a normal enquiry – HMRC has 12 months from the filing date of your tax return to raise an enquiry, and so the clock is ticking for those that filed on 6 April 2023 and HMRC have until 6 April 2024 to issue the enquiry notice.”
He added: “One point to watch out if filing early relates to charitable giving – it is possible to carry back tax relief for charitable donations made under gift aid after 5 April 2023 and before 31 January 2024, up until the point of filing your tax return.
“Therefore, if you are expecting to be particularly philanthropic between now and 31 January 2024, it is worth considering delaying your tax return filing until you’ve made the charity donation to give you the option to carry back the relief to 2022/23. Whilst someone theoretically has until 31 January 2024 to amend their 2022/23 tax return, it is not possible to do this to add in carried-back gift aid donations.”
Nimesh said: “Of course, human nature is to leave filing your tax return until the last moment and most will put off doing it. With more people having to file a self-assessment tax return, partly due to frozen personal tax allowances and thresholds, I’m expecting a record number of people to file on 31 January 2024.”