There are plenty of reasons to file your tax return early. The biggest one is certainty.

Once you know what your Self Assessment bill looks like, you can plan for it. If you have enough money put aside, great. If there is a shortfall, you have time to deal with it rather than discovering the problem a few days before the payment deadline.

Filing early can also give you more time to find missing information, review your return, deal with payments on account and reduce the stress that comes with leaving everything until January.

About this episode

Every year, many people know the Self Assessment deadline is coming but still leave the return until the last few weeks.

That may feel harmless when January is several months away.

However, waiting removes one of the most useful things we can have when dealing with tax: time.

Submitting the return earlier gives us time to understand the liability, organise the cash, check the information and deal with problems before they become urgent.

The return has to be dealt with anyway. So the real question is whether we want to deal with it calmly or under deadline pressure.

Filing early tells you what your tax bill will be

One of the strongest reasons for completing your return early is that uncertainty disappears.

Instead of wondering how much tax you might owe, you get a much clearer figure to plan around.

That matters because filing the return and paying the bill are not the same event.

HMRC allows you to submit your return before the payment deadline. Filing early does not normally mean you have to pay early.

So rather than delaying the return because you do not want to part with the money yet, use the return to find out what you actually need to prepare for.

You have more time to budget for the bill

Once you know the amount, you have a target.

If you have already been saving for tax, you can check whether the money you have reserved is enough.

If there is a gap, finding that out months before the deadline gives you far more options than discovering it in January.

You can increase the amount you save, make payments towards the bill or adjust other cash commitments.

Our guide to How to Budget for Your Tax Bill When You're Self-Employed explains how to estimate the liability, ring-fence money and build tax into your normal financial routine.

More time to deal with a payment problem

Finding out early that you may struggle to pay is much better than finding out at the deadline.

If you cannot pay your tax bill in full, HMRC may be able to agree a payment arrangement depending on your circumstances.

The important thing is not to ignore the problem.

Knowing the amount early gives you time to understand the shortfall and decide what to do next.

HMRC also offers a Budget Payment Plan for eligible taxpayers who are up to date with their previous Self Assessment payments and want to make regular weekly or monthly payments towards the next bill.

Find missing information before it becomes urgent

Another obstacle to completing a tax return is simply gathering everything you need.

You may need information about self-employment, employment, property income, savings, investments or other taxable income.

There may also be expenses, allowances or reliefs that need supporting information.

If you begin early, discovering a missing statement or receipt is inconvenient rather than disastrous.

You have time to retrieve information, check figures and ask questions.

If you leave the process until the final days, every missing item becomes a deadline problem.

Give yourself time to review the return

Completing a tax return does not mean we have to press submit immediately.

Preparing it early gives us the opportunity to look at the numbers properly.

Check whether the income looks reasonable. Review the expenses and claims. Ask whether anything appears to be missing.

If an accountant prepares the return for you, earlier information also gives them more time to raise questions and resolve anything unusual.

That extra review time can help prevent avoidable mistakes.

Understand payments on account sooner

Payments on account are another reason Self Assessment bills can surprise people.

Where they apply, HMRC normally asks for two advance payments towards the following year's bill.

These are usually due on 31 January and 31 July.

That means the amount due in January can include both a balancing amount for the tax year just completed and the first payment towards the next one.

Completing the return earlier lets you see how these amounts affect your cash planning.

If your expected tax bill for the following year will be lower, there are circumstances where you can ask HMRC to reduce your payments on account. Be careful not to reduce them too far because HMRC can charge interest if the eventual liability is higher than the reduced amount.

For the full explanation, see Payments on Account Explained: What They Are, When to Pay and How to Reduce Them.

Earlier information can help with mortgages and other applications

Your tax return is not only useful for HMRC.

If you are self-employed, lenders may ask for evidence of your income when you apply for a mortgage or other finance.

Once you have submitted your Self Assessment return, you can obtain your tax calculation, often referred to as an SA302, and a tax year overview.

Getting the return completed earlier can therefore help if you know you will need up-to-date evidence of income.

A tax refund can arrive sooner

Early filing does not always mean you owe money.

Sometimes you may have paid too much tax and be due a refund.

Submitting earlier means HMRC can process that refund sooner rather than waiting until the busy January filing period.

That is another reason not to assume there is an advantage in delaying the return.

Help your accountant avoid the January bottleneck

If you use an accountant, sending your information early makes their job easier too.

January creates a natural bottleneck because large numbers of Self Assessment returns reach their deadline at the same time.

Late paperwork can mean less time for questions, less time for review and more pressure for everybody involved.

Depending on your accountant's terms, leaving information very late may also affect the fee you pay.

An earlier start gives both you and your accountant more room to do the job properly.

Reduce the stress of Self Assessment

There is also a simple psychological benefit.

Knowing what the bill is removes uncertainty.

Submitting the return removes a task that has probably been sitting somewhere in the back of your mind.

Think of the messy room, overflowing drawer or piece of work you keep avoiding. The job itself may not be enjoyable, but there is a noticeable sense of relief once it is finished.

Tax returns can work in exactly the same way.

Getting the task out of the way gives you one less thing to worry about.

What do you need before you start?

Exactly what you need depends on your circumstances.

Typical information may include:

• self-employment income and expenses
• employment income
• property income and related expenses
• savings and investment income
• pension information
• other taxable income
• information relating to relevant allowances and reliefs

Good records make the process much easier.

If you want a broader explanation of the return itself, see Self Assessment Tax Returns.

A simple early-filing routine

1. Start gathering information once the tax year has finished.
2. Bring your bookkeeping up to date.
3. Prepare the return or send the information to your accountant.
4. Review the calculation and understand what you owe.
5. Check whether payments on account apply.
6. Compare the bill with the money you have saved.
7. Deal with any shortfall before the deadline approaches.
8. Submit the return and keep the relevant records.

The objective is not to pay tax months before you need to.

The objective is to replace uncertainty with information and give yourself time to act.

FAQs

Why should I file my tax return early?

Filing early lets you know what you owe sooner, gives you more time to budget, helps you correct mistakes and can reduce the stress of dealing with Self Assessment close to the deadline.

Does filing my tax return early mean I have to pay early?

No. Filing the return early does not normally bring the Self Assessment payment deadline forward. You can know the bill in advance while keeping the normal payment deadline.

Can I get a tax refund sooner if I submit early?

Potentially, yes. If HMRC owes you a refund, submitting the return earlier allows the repayment process to begin sooner.

Can early filing help with a mortgage application?

Yes. Self-employed applicants may need evidence of income such as an SA302 tax calculation and tax year overview. These become available after the relevant return has been submitted and processed.

What happens if I realise I cannot afford the tax bill?

Knowing early gives you more time to prepare. You may be able to save more before the deadline, make payments towards the bill or speak to HMRC about available payment arrangements if you cannot pay on time.

When are payments on account due?

Where payments on account apply, the standard dates are 31 January and 31 July.

Episode Timecodes

• 00:00 - Why getting your tax return in early matters
• 00:54 - Starting with the Self Assessment deadline
• 01:49 - Why waiting until January is a poor approach
• 02:09 - Filing early does not mean paying early
• 02:30 - Knowing the liability and budgeting for it
• 02:49 - What to do if the money is not there
• 03:54 - Finding missing paperwork and reviewing claims
• 04:13 - Payments on account
• 05:20 - Giving your accountant more time
• 06:01 - Tax returns and mortgage applications
• 06:31 - Reducing stress and clearing the task
• 07:14 - Information you may need for the return
• 07:54 - Estimating your tax bill
• 09:37 - Final reasons for filing early

Related episodes and guides

• How to Budget for Your Tax Bill When You're Self-Employed
• Payments on Account Explained: What They Are, When to Pay and How to Reduce Them
• Self Assessment Tax Returns
• Personal Tax Return Explained

Key takeaway

Getting your tax return done early is really about buying yourself time.

You know the liability sooner. You can compare it with the money you have saved, deal with missing information and understand any payments on account before the deadline becomes urgent.

You may also receive a refund sooner, have useful income evidence available and remove a job that has been sitting in the back of your mind.

Most importantly, filing early does not mean paying early.

Do the return, understand the number and use the time between filing and payment to plan properly.

Plan it, Do it, Profit.

Further Support

If you want an estimate of your tax or need help understanding your wider business numbers, use our free online business calculators.

If you need help preparing your Self Assessment, understanding your tax bill or planning how to pay it, you can contact us for an initial chat.

You can also watch more practical finance and tax support on the I Hate Numbers YouTube channel, or listen and follow on Apple Podcasts.

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Get your tax return in early. That's the conclusion of my broadcast, and I'm going to share with you the reasons as to why it's really beneficial for you to send your tax return in earlier than the deadline. I'm also going to share with you in this podcast episode some tools and resources to help you do the numbers while you're waiting for the return to be completed, and also a chance to win 50 pounds,

either in cash or Amazon vouchers. More of that, later on in the podcast,

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks. My name is Mahmood. I'm an accountant in practice who's been working for over 26 years, helping businesses of all sizes and complexity make more profits, save time, save tax, give them the business lifestyle they want, and improve their money attitude. There are many reasons why you should send your tax return in early, and by sending it early, let's think about, first of all, the deadline. Now, for the 2020 to 2021 tax-return season,

you have until the 31st of January, 2022 to submit your personal tax return. If you do not submit it on time, then you will face a fine of at least a hundred pounds and any interest on the tax due. Now, you might be thinking, well, that's several months ahead. I've got nothing to worry about, so I'll just wait and deal with it as I normally do with the many millions of taxpayers, and do that in the last month or so before the tax return

deadline comes in. I'm going to take the outset. That's not a good approach, and I'm going to share with you now the many reasons as to why sending your tax return in early is a really good thing for you to do. Firstly, let's distinguish between sending in the tax return and actually paying the tax office.

Now, if you send in your tax return now, the actual payment for that tax return does not have to be made until the 31st of January, 2022. What that means is you have plenty of time to make sure that you've got the funds put to one side to pay for that tax bill. That means that you've got more certainty as to where your liabilities are.

So, when you are planning and budgeting, you know what that exposure should be. And if I was being realistic here, as a piece of advice, I would always recommend individuals, businesses to put money aside to pay for their tax as they go along. I'll share a link in the podcast notes at the end about budgeting for your tax

and how you can estimate what your tax bill should be. So, if you've put the funds aside, excellent, you'll know if you've got enough money to pay for that tax. If you haven't put the funds aside or you haven't put enough, then you've got time to make good that shortfall. Also, if you have a fine that you haven't got the funds or you don't think you can have the funds to pay your tax, then it's more than possible to talk to HMRC,

and negotiate a payment plan, a proposal in which to spread your payments out. Think like any supplier, if you want time to pay any outstanding bills, having a conversation with them is going to be much easier once they know what the liabilities will be. Now, it's not just a question of this certainty of putting the money aside to pay for the tax, know what their target is, and that is a massive stress reliever, by the way.

I've seen that in many hundreds of thousands of people. Once they know what their bills are, it gives them a degree of comfort. And let me ask you, would you rather know how much tax you've got to pay a couple of weeks before the deadline, or several months in advance? I know which one I would pick.

Getting your tax return early also means that you've got time to get your tax return reviewed. If you're doing the tax return yourself, you can see what's going on, and then you can identify where the gaps might be, the paperwork that you might need to retrieve, the claims that you can make, and you've got time on your side to help you do that.

Let's continue talking about money. Now, in the UK tax regime, we have this system known as payments on account, and it says if you owe more than a thousand pounds worth of tax, if the circumstances are going to be pretty much similar for the following year, HMRC will want 50% of that money upfront again

towards the following year's tax bill, and that can be quite a bit of a shock to the system if you're not used to doing it. If you are really in the tax system and you are used to paying payments on account, getting your tax return early may mean that you can revisit those payments that you've made. So, we're talking about certainty, a degree of comfort, knowing what you've got to pay several months before you have to make that payment.

You're talking about the opportunity to find ways of actually smoothing out the payments of that tax bill, talking to HMRC, coming out with a payment proposal. Bear in mind, folks, for those of you who've been claiming this self-employed grant, the self-employed grant is a good positive injection during the pandemic, but it's also taxable and subject to national insurance.

Now, what are the other good reasons for getting your tax return in early? Well, other good reasons for getting your tax return in early is that if you are somebody who normally gives your information relatively late to your accountant, if you've got one, then you'll tend to find a) that puts pressure on your accountant because they'll create a bottleneck, and certainly, in my firm,

we tell clients well in advance, at the very beginning of the tax year, that if for any reason their paperwork comes in relatively late, very close to the deadline because of the investment that we have to make, it's likely there'll be a premium charged on that late submission of paperwork. And that's becoming more and more standard practice.

So, if you want to manage your fee budget positively with your accountant and not put too much strain on them, not having them burning the midnight oil with hundreds of tax returns to get through, then earlier is better. If you've got a mortgage that you're thinking, you're thinking of moving house, remortgaging your property, then the lender will want sight of your tax returns, and if you can get your tax return in early, then you can produce the documentation in good time to give to that mortgage lender.

Stress, well-being. Having that clarity, knowing what lies ahead, certainly in paying tax, is a real positive boost to what goes on behind your ears. And I've seen thousands of people over the years, when those tax returns are submitted and they're reviewed, and when the returns are finally submitted, it's amazing the relief that there is knowing that there is one obligation out the way.

That's one task that they have to do. You have no choice in the context of tax to submit that tax return. It's out the way, and that's one task that's ticked off. Very much like that messy bedroom or that sort of piece of work in your entry that you're dreading doing. It's that amazing boost to your well-being when you've done that task and got it out of the way.

Now, if you're thinking, one of the obstacles about starting my tax return is what do I need to get hold of? Let me share with you results that we share with our clients. It's available on the website. There's a link in the show notes about the information that you typically need for your personal tax return, going from what you need if you are self-employed,

if you're renting property, if you're in a part-time or full-time job, and it'll go through the typical documentation, the information that you need to start gathering to start that process of doing your tax return. As an additional bonus within that same download, there's also a list of typical expenses that you can claim

if you are self-employed. While you're waiting for your tax return to be submitted, or you're thinking, I want to have some idea what tax I'm going to pay, don't get yourself on a kerfuffle. Don't get stressed out. Getting the tax return in promptly, getting the tax return prepared will give you the certainty of what that tax bill is.

Now, if you don't want to wait, you want to have a rough estimate of what your tax is going to be, then check on our website and there's a suite of business calculators there whereby you tap in a few numbers and within a few seconds you'll have a pretty damn good estimate of what your tax bill is likely to be.

Now, I mentioned earlier on at the very beginning of the podcast about a 50-pound cash prize bonus up an offer. Now I'm fascinated by people's attitudes to money. People in business, we think about money, we talk about money, we plan what we're going to do with more money. We don't really often deal with money correctly in our businesses,

and underpinning all that is our attitudes to money. Now, I'm carrying out a research project on people's attitudes behind money. We've got some fantastic responses so far. Several hundred people have already responded, and I'd love you to share a minute or two of your time to take part and answer the survey.

Now, not only will you contribute to finding more about why we have these attitudes, And what we can do to improve them. Not only will you get the opportunity to share in and be informed of what the results of that survey are, but also there's a great opportunity to have a prize of 50 pounds. So, I will be doing a draw at the end of May, and the winner will either receive 50 pounds in hard cash or a 50-pound Amazon voucher.

There are other vouchers out there. Amazon, for me, is a pretty good one. Check out the show notes. You'll find it all there. So, let's round up folks about the reasons for sending in your tax return early. There are more good reasons for sending your tax return in early than actually delaying it. So, there's that certainty of what the tax is.

There's actually knowing the funds are going to be there or what you need to save to get there. There's relieving the stress and that's a massive bonus there in terms of your well-being. There's the fact of knowing that's one tedious task out the way. There's a potential opportunity for you to reduce your fees if you've got an accountant who's doing your tax return,

or certainly not putting too much stress on there. Have that positive relationship. So, folks, hope you got some value out of this podcast. I'd love it if you could subscribe. Share it with your friends and families. Until then, I'll see you next week.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.