Although the very final deadline to complete a 2023/24 personal tax return is 31st January 2025, leaving it until the last minute has many disadvantages.
The paper tax return deadline is 31st October 2024, which is a good date to use as a final deadline instead. However, there is no need to even wait that long – for most people all the information is available by July.
The benefits to completing your tax return as soon as possible include:
- Knowing what your tax liabilities will be – sadly, with inflation and frozen allowances/bands we are seeing increasing tax liabilities. If you submit the return later in the year, you will have less time to raise the funds to settle the tax due. This is further compounded if you have to make in-advance payments on account, particularly if this is the first year where they arise. Your tax bill could be 150% higher than you had even planned for.
- If you already have to make a 31st July 2024 payment on account, this will have been estimated based on last year’s income so may be able to be reduced if your profits have gone down. When the 2023/24 tax return is submitted, the payment on account is adjusted to the actual amount due. You will also know what the payments are for January and July 2025, so can plan for them now.
- Avoiding fines and penalties – if you miss the 31st January 2025 deadline, there is an automatic £100 fine. In addition, further penalties are applied if the return remains outstanding – these can amount to £1,600 or more, even when you don’t owe any tax or are due a repayment. If the return hasn’t been submitted by 31st January 2025, then you won’t know what your tax liabilities are and will already be building up interest charges. If you haven’t paid the tax due a month later, then a 5% penalty is added on top. When you combine the penalties, increased tax liabilities and interest these can add up to a significant amount.
- Receiving any repayments sooner – at this time of year, the chance of receiving any tax repayments earlier is increased. I have even seen repayments issued within a week of submitting the return. However, the longer you wait, the greater chance of a repayment taking significantly longer. Sadly, I have seen repayments for returns submitted in January take many months to be issued.
- Tax remains payable at the normal due dates – you don’t have to pay the tax due any earlier if you submit the return before the deadline (unless for a small number of people who had reduced their payments on account, but these would be subject to interest anyway from the date that you should have paid a higher amount.)
- Make sure your current tax code is correct – when the return is prepared, the position is reviewed and your tax code updated by HMRC. Should this happen late in the year, then there is not much time for the position to be corrected before the next tax year starts.
- Paying interest-free through next year’s tax code – if you receive income through PAYE and owe less than £3,000 you can pay this in monthly instalments through your tax code from 6th April 2025 to 5th April 2026. However, you can only apply to do this if the return has been submitted and processed by 31st January 2024.
There is also the advantage of having completed your return, you won’t have to worry about tax for another year. If you require assistance, please do make contact. I offer a no-charge initial short email consultation. Clients benefit from being reminded about upcoming deadlines and changes in tax rules, removing as much worry as possible. My fixed-fees also mean that they can contact me throughout the year with any tax queries they may have.