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A guide to self-assessment tax returns for the 31 January deadline

Reasons to file your January Self-Assessment early

It’s not Christmas, the January 31, 2022 Self-Assessment deadline – it comes around earlier than you think, so here are some reasons to file early.

Number one, said tongue in cheek, is it will help everyone out – both you, your business, your family and your bookkeeper or accountant.

It’s the busiest time of year for us and with all the changes over the past 18 months, we simply may not be able to keep up with demand if everyone files last minute.

And if you file late you could incur a fine.

We know you’ve likely had enough of what to apply for and when and would quite frankly rather get Christmas out of the way with more than six people in attendance!

But the changes of the past year also mean that we will have an unprecedented amount of work to do come January, and we don’t want to be in a position where we can’t help everyone.

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.

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.

Here are our reasons why filing early will genuinely benefit 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.

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. Those penalties are:

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, almost 400,000 callers, around 1 in 5, didn’t manage to get through at all, abandoning their attempts whilst waiting in the three-month period from September to November 2020.

Reason 5: It might not all be bad news

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.

Reason 6: Your Christmas won’t be ruined

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.

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 any bank statement-related chaos.

So, don’t leave it to the last minute, get on top of things and file early! We are here and ready and waiting to help and the earlier the better!