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Seven reasons why you should file your Self Assessment early

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The Self Assessment is the dirty laundry of the business world – you know it needs doing by the end of January each year, but you put it off, again and again, hoping that somehow it’ll do itself. Suddenly Christmas has come to pass and you realise there’s no avoiding it any more.

You’re not the only one procrastinating – In January 2021, although 10.7million people submitted their 2019/20 returns by the 31st January deadline, HMRC estimated that almost 1.8m people missed the deadline, nearly double the rate reported the previous year.

It should come as no surprise that, historically, deadline day is the busiest single day for filing your Self Assessment tax return with HMRC. In 2020, some 700,000  taxpayers left it to the very last day – with a nail-biting 26,562 taxpayers leaving it to the last hour! Every year HMRC rakes in millions in fines from those filing late and having to pay penalties and interest.

HMRC have a chequered history when it comes to Self Assessment season. In 2012, the Self Assessment deadline was extended after HMRC call centre staff went on strike on January 31st, and in 2014 many taxpayers were given a two-week extension due to issues with HMRC’s online portal. HMRC has also faced stability issues with its Online Services – the website used to complete Self Assessments online. At its peak, HMRC Online Services processes around 12 returns per second.

All of this may lead you to one inevitable conclusion: it makes sense to file early. Still not convinced? Let’s take a look at the other dangers if you leave it all to the last minute.

We take the pain out of Self Assessments

Whether you’ve found yourself on this article either because the Self Assessment deadline is right on your doorstep, or because you’re looking to get ahead of the curve this year, we can help.

As soon as you have all the information you need (such as a Form P60, P45, P11D and all your income and expenses, you can file your Self Assessment. Usually, that means you could be ready to file from mid-June.

Every year we help our Crunch clients file their Self Assessments on time (and often nice and early), guaranteeing them a stress-free Christmas season and a relaxing start to the New Year. Check out our online accounting software page for more information on our state-of-the-art accounting software and our Chartered Certified Accountants.

So let’s get back to the task in hand, and those seven reasons to file early that we promised you!

Reason 1: It takes time to register

You can’t just go online and file a Self Assessment – HMRC has to be expecting a return from you. This means you have to register in advance, and that process takes time.

How long? Well, that depends on the time of year. Out of peak times, it can take a fortnight or so, but if you wait until the January rush (the busiest time for HMRC’s customer service) it could take far longer.

There are two stages to registration. First, you need a Unique Taxpayer Reference (UTR), which is sent to you in the post. You use your UTR to register for HMRC Online Services.

Secondly, HMRC will send you a PIN number in the post to access Online Services where you can file your Self Assessment. This arduous process should become simpler when HMRC rolls out online tax accounts, but for now, you’re reliant on Royal Mail and HMRC to get registered.


Reason 2: It gives you time to save for your tax bill

Although you may choose to file your Self Assessment early, your tax bill still isn’t actually due until January 31st. If you file in July, then, you’ll have a full six months to budget for any tax you owe. Conversely, if you file in January but find you don’t have enough money to actually pay your taxes, you’ll be in line for one of HMRC’s famous on-the-spot £100 fines. Ouch.

Filing early is even more pertinent for the 2023/2024 tax year, considering the income threshold for needing to submit a Self-Assessment form has risen from £100,000 to £150,000. By filing early, you'll have ample time to understand and budget for any changes in your tax obligations due to this new threshold

Reason 3: You’ll avoid penalties

Speaking of penalties, filing early will obviously give you time to address any problems and avoid HMRC’s late filing penalties. For the uninitiated, those penalties are:

  • A £100 instant fine if you miss the January 31st deadline
  • £10-per-day fines (for up to 90 days) if you haven’t filed by 30th April
  • A £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed after another 90 days
  • Another £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year
  • Additional penalties – including up to 100% of owed tax – if HMRC believes you are intentionally delaying your filing.

There were some changes to the rules and fines in January 2021 as a result of the Coronavirus pandemic, but they’re unlikely to be repeated next January,

Reason 4: HMRC’s call centres are always overwhelmed in January

If you’ve ever attempted to get in touch with HMRC’s personal tax helplines in January, you’ll most likely know their hold music by heart. The taxman doesn’t have the best reputation for customer service, and unfortunately, that reputation is hard-earned.

Not to scare you, but with increasing pressure on already stretched resources due to the Coronavirus pandemic, and new customs requirements due to Brexit, it all looks set to get even worse. According to HMRC’s own data, released in January 2021, the average waiting time for callers had risen to almost 14 minutes, and 49.2% of callers had to wait for more than 10 minutes to be answered in January 2021. Almost 400,000 callers, around 1 in 5, didn’t manage to get through at all, abandoning their attempts whilst waiting in the 3 month period from September to November 2020.

The moral of the story, folks, is that if you think you might need help with your Self Assessment, don’t leave it until January or you’ll have some lengthy hold times.

Reason 5: It might not all be bad news

HMRC taketh away, but HMRC also giveth. Some lucky business owners (especially those who mix self-employment with salaried employment) will be owed a tax refund.

If you’ve overpaid tax during the last year, HMRC will let you know when you file your Self Assessment and give it back straight away. Well, not straight away – this is HMRC we’re talking about after all. It can take a few weeks to process your refund.

But knowing you have cash coming into your bank account rather than going out will help your cash flow hugely. You could buy some new equipment, pay off some company debt, pay it into a pension, or just save it for a rainy day. The world is your oyster, and all because you filed your Self Assessment early – good for you!

Also, given the new assessment basis for self-employed profits, which will now be based on the amounts arising between 6 April and 5 April, filing early could reveal potential tax benefits or refunds owed to you under this new system, especially for the self-employed and small businesses.

Reason 6: Your Christmas won’t be ruined

A survey we carried out for our Crunch: Safety in Numbers report a few years ago found that over 50% of small businesses were stressed about Self Assessment. With the number of self-employed workers in the UK growing faster than ever, more and more people are facing their first ever filing – in fact the number of people required to file has increased by over 1 million in just the last four years.

Filing early will mean you can avoid the mid-January dread felt by many freelancers and contractors, and enjoy a well-earned worry-free rest over the festive period. HMRC even used this angle in its most recent advertising push, promising taxpayers they would “find inner peace” by filing on time.

Reason 7: It can take time to get everything you need to file

To file your Self Assessment you need all kinds of paperwork – P45s, P60s, expenses, invoices, and bank statements. If you file in January you’ll need records going back almost two years, and many banks don’t let you get to that information easily.

Depending on your bank and the type of account you have, you may need to order historic statements either in a digital or paper format. If you bank with a particularly archaic financial institution, you may also have to pay for them.

The more organised Self Assessment filers will download and store monthly statements in handy CSV format, but mistakes can and will happen on January 31st, so file that return early and overcome and bank statement-related snafus.

So, don’t leave it to the last minute, get on top of things and file early! If you’re a Crunch client, log in and click the Personal Tax tab to get started.

If you’re not yet a Crunch client, you could start by using our Crunch Free software that lets you keep on top of your bookkeeping, or you could take a look at our complete accountancy packages that can include all the support and expert advice you need, including filing your Self Assessment and other business tax returns.

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Lucinda Watkinson
Head of Accounting
Updated on
January 18, 2024

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