Avoid Last-Minute Tax Stress: 10 Early Filing Benefits for 2024–25

:: 00:00

Millions of people every year have to complete a personal tax return, and that could be because they're self-employed, they've got income that hasn't been taxed to source like savings interest, they could have properties they're renting out, they could be high net worth individuals, they could be people who are receiving child benefit or are classified in that bracket as well.

:: 00:21

A number of reasons why that could be going on. Now, my view is that where you can, file your tax return as early as possible. We've already filed thousands of tax returns over the years and in this year that we're looking at, we've already submitted tax returns even before the season gets fully underway.

:: 00:36

And in this week's podcast, I'm going to outline 10 benefits of filing your tax return early.

:: 00:50

Now in no particular order, number one, removing the stress early. Now, let's be honest, tax season can be, if not managed correctly, a very stressful process, not just for the accountants doing the returns, but for the individuals who have to get all the information together, put things, assemble them, either do it themselves or give it to their accountant to actually file it on their behalf.

:: 01:11

That timeline can creep up on you, and before you know it, you're in the period of Christmas. You've still got time to go, but who really wants to be doing tax returns over the Christmas period? Now, if you did your tax return early, then you can remove that looming deadline from your life and it's one thing ticked off your to-do list, and instantly you'll feel a bit of a weight off your shoulders. Instead of waiting for

:: 01:33

January 26th to come around the corner, you completed the tax return by say, December 25, and we're talking about 24-25 returns here - no last minute rush, no late night calculations. You can move forward with confidence knowing that this task is out the way. And the best part with this out of the way, off your shoulders, you can focus on more important things growing your business or just enjoying your life.

:: 01:57

Reason number two sounds like a bit of a song, doesn't it? You can know what you owe HMRC sooner rather than later. Having that nasty tax surprise creep up on you can be a bit of a shock to the system. When you know what you owe, that brings a degree of clarity and calm certainty, and something that beats the guessing game any day.

:: 02:16

You won't be left wondering how much tax you owe because you'll know that figure and you don't have to pay it straight away. Remember, under normal circumstances for a 24-25 tax return, the tax doesn't have to be paid until the 31st of January, 2026. 31st of January, 26 is the line in the sand, the deadline, where everything has to be sorted.

:: 02:37

You're able to cash flow, to budget - my two favourite terms, and if you find you haven't got the funds to put aside, you get time to figure out a repayment plan with HMRC and get time to get that money together. Reason number three, there's the option if you don't have the funds that you can pay via PAYE. PAYE can spread that cost burden for you.

:: 02:59

Now, if you end up owing less than 3000 pounds worth of tax and you are on PAYE, so it's not unusual, you could have a part-time job or full-time job, your business could be a side hustle, for example or you could be in employment, you've got some property income for which you owe some money, well, you can spread your tax bill in your 26 27 code. As long as you file your tax return, by the 30th of December, 2025,

:: 03:23

HMRC will collect what you owe through your PAYE deductions. Treat it like an interest free loan. Your monthly salary in terms of take home pay will be slightly less, but that tax bill could be spread by having it collected much later, and it's all interest free. It's a simple way to manage your tax payments without the stress of finding a lump sum of money, which you might want to put some on side for a holiday or a house on purchase.

:: 03:47

Reason number four, it may be, and it happens, we've seen it quite often, that you may be owed money back for yourself - a tax refund. The sooner you file, the sooner you get that money. If you have ended up overpaying your tax in 24-25, whether your payments are account are too high, you've got business losses that you can claim,

:: 04:05

you've overestimated your income and the reality is when you put the records together, it's much less. If your income is dropped compared to where you thought it was, any of those reasons, filing early means you get your refund sooner. Now, this can be a great boost to your household budget, your business working capital, easing your finances, and the sooner HMRC process, the claim and the return, you'll know exactly what's owed

:: 04:28

and you should be able to figure out whether there's a repayment due or not. Now, when we process this for clients, we get a pretty good idea within a week or two of filing it when that money's going to come into our client account. We normally know at the time of doing the return whether money is owed back to the client as well.

:: 04:43

That's a nice little Brucie Bonus. Reason number five, the wonderful payment on account. Now, for those people who are already in the tax return system, if you've owed more than a thousand pounds from your last year, you're going to have payments on account to make. You've got a second one coming up in July.

:: 04:59

If by the time you listen to the broadcast coming back, it's gone past July, you can still do your tax return, get that in early, and it can recalculate what you've paid already. But if you're in that situation, your cash flow is tight, you know, circumstances have changed, getting the return done before July is an ideal moment.

:: 05:15

No more overpaying, filing early, more money in your pocket. Reason number six, and I said there are 10 here, so we've got some juicy ones to come. You can check if you're actually caught by MTD: Making Tax Digital. Check out the show notes, check our previous podcast, by the way, where we've talked about this very subject.

:: 05:32

Now, if you are self-employed or a landlord, Making Tax Digital could have your name marked. Now starting on April 26th, making taxes to all affect sole traders and landlords with income in excess of 50 grand. That's not profits, that's income. So if you file early, you'll know if that change is going to impact on you.

:: 05:49

You'll have time to get ready for the switch to digital tax reporting. What's not to love about that? Reason number seven: transition profits. Now 23-24 marked the first year where the basis period for self-employed individuals was set to a fiscal year, 5th of April basis. So if you are self-employed on a non-standard year end, this could be up your street.

:: 06:10

If you have transition profits from 23-24, you could spread them over five years. Once you're 24-25 return is filed, you'll know you're bringing some of those profits forward, could help you pay less tax. It's about maximising those allowances and the lower rates. Reason number eight, that proof of income.

:: 06:26

Now for many individuals who've got tax returns, that's going to be a basis of proving income. If you want to borrow money, get a mortgage, filing early is the way to go because the lender will want that documented proof of what your income is - the most recent ones they like to go for. And many lenders, including those mortgages or loans

:: 06:44

require a final tax return as official evidence of your income. I'm just going to drop in that SA302. It's a popular term they throw about. So by finding early, you'll have that proof ready and give yourself the edge when you apply for finance. Now this can be really helpful if you are a freelancer, a contractor, a sole trader, who needs to show that confirmation of income.

:: 07:07

Reason number nine - it helps in your future tax planning. It gives you that clearer picture of your finances, the areas that you can try to mitigate, and it really feeds into the process. When we do tax advice and planning for clients here, we like to help understand what the numbers are saying so we can give appropriate advice accordingly.

:: 07:26

If you review your return early, you can spot opportunities to approve your tax efficiency. Maybe it's a decision about how your money is saved, pensions, business structure, how you take money from your business, whatever that is, early filing helps provide that information for a more tax-efficient future.

:: 07:44

Reason number 10, and again, I'm not giving any weightings or priority to these benefits, but reason number 10 is your accountant will definitely appreciate that. Finding early means they avoid the January scramble. Many accountants, taxpayers file quite late up to the 31st of January deadline. Send the information early.

:: 08:03

You avoid the last minute rush, win their goodwill and in our practice, we say to clients upfront that if you give your information in after a certain time, typically around about the end of November, we'll do it our level best to get them filed on time. We've never missed a deadline yet, but there's going to be a premium because of staff overtime and staff working. It also gives you time to react, provide that information, and it's a stress-free situation all round. So why wait?

:: 08:29

Do it now and reap those benefits. Now, the tax return deadline feels a long way off. Clocks go quickly and the benefits of filing early are here right now. Control over your finances, reduce pressure, and you might even save money in the process. Now, I'm just going to leave you some key dates to remember. The tax year

:: 08:47

24-25 started officially on the 6th of April 24. The 31st of July 25 is when your first payment on account is due from the previous year. December 25, 30th is the deadline to have any underpayments coded by P-A-Y-E and the 31st of January 26th is the timeline for the self-assessment finding deadline and paying any taxes due and your first payment on account as well.

:: 09:11

Now if you need help with your tax return, check out our website, YouTube channel, podcast for information that we publish that's free of charge, free to access. Join our mailing list so we can keep you informed of what's going on and, you know, contact us if you want to have a chat about your tax return, then we'd be happy to speak to you.

:: 09:28

And I hope some of these benefits with finding your tax return early have resonated. If you feel this has been a benefit, we'd love it if you could share the episode. Until next time, folks, happy tax returning.