1. Osome Blog UK
  2. Exactly Why You Should File Your Self-Assessment Early

Exactly Why You Should File Your Self-Assessment Early

Author Osome Content TeamOsome Content Team

3 min read
Money Talk

We know it feels like the 31st of January is a long way away, but this date can creep up on you quickly. And you don’t want to be on the wrong side of HMRC or facing fines or penalties.

Exactly Why You Should File Your Self-Assessment Early

It’s rare that anyone wants to think about filing their tax return, but it’s something that we should consider as early as possible. While the 31st of January seems like a long way away, this date can creep up on you in no time.

At Osome, we help a lot of small businesses and sole traders with their accounting and often self-assessment is the last thing our clients want to talk about. This is why it’s our job to explain the intricacies of filing self-assessment tax returns and try to reduce the anxiety people feel about the subject.

So, a big part of our initial advice is to always be organised and take the early tax route. Here’s our top five reasons to file early.

  1. Registration Takes Time

You have to register with HMRC before you can file your tax return. This is a straight forward process, but if can take a couple of weeks for you to receive your Unique Taxpayer Reference (UTR) and your PIN. For security reasons these have to been sent to you separately, and you’ll need both before you can access the online services.

You might also have to bring together other documents that you hadn’t been anticipating such as expenses, bank statements, invoices, P60s and P45s. This could take more time to collate and put you under pressure as the deadline nears.

And the couple of weeks it could take to get your UTR and PIN? That’s not during peak times. You can double it if you leave it to January.

  1. January Is a Busy Time for HMRC

This is the month where that January 31st tax deadline that seemed so far away, suddenly doesn’t just creep up, but leaps on everyone and we all feel we should be first in the queue to be served. But the reality is that HMRC’s call centre is stretched to capacity at the best of times, so in January you can expect delays at every turn.

According to HMRC’s own 2021 data, the average waiting time for a customer on the phone in January is almost fourteen minutes. So the more you can get early tax filing into your head, the less painful hold music you’ll have to endure.

  1. Manage Your Cash Flow

What keeps your cash flow positive?

We've put together a list of eight actionable ways you can manage your cash flow and make more profitable decisions for your business.

One of the battles sole traders and small businesses face every month is keeping cash flow consistent. No one wants the roller coaster of having to just scrape through financially on those lean months or get hit by a large tax bill when you least need it.

Early Self-Assessment allows you to plan your tax bill and insert it into a period that makes sense for your finances. By being organised, you may be able to put aside some money for a few months so it doesn’t sting so much when you make the payment.

  1. Avoid Making Mistakes and Getting Penalties

A slap on the wrist from HMRC for filing late will cost you — even if you file only one day late. The fines can stack up, for example:

  • 1 day late = £100 fine
  • More than 3 months late = £10 daily penalty for up to 90 days (max. £900), plus the above initial £100 fine
  • More than 6 months late = 5% of tax due or £300 (whichever is greater), plus the above penalties
  • More than 12 months late = An additional 5% of tax due or £300 (whichever is greater), plus the above penalties. In the most serious cases, you may be fined 100% of the tax due.

And if you leave it to the last minute you’re more likely to make mistakes. This could mean you have to resubmit which could cause you to miss the deadline and, yes, be fined.

  1. It Could Be Good News!

Let’s not just be pessimistic when it comes to your tax return. The flip side of the coin is that you might be entitled to a refund!

The amount of tax you owe will vary from year to year and if you overpaid, HMRC will refund you based on the tax return you submitted. It might take a few weeks to process the refund, but the sooner you submit your tax return the sooner it will arrive.

  1. Do It Early

The bottom line is very simple: get your self-assessment tax return in well ahead of time and you’ll save yourself a lot of stress. HMRC don’t want to fine you, they want to help you, but they have to follow rules and sometimes tax can be confusing to the uninitiated.

If any of this seems overwhelming, or you just want an easy solution to helping you with all of your accounting online, we’d love to chat.

Share this post:
Subscribe

Tips to run your business smarter. Delivered to you monthly.

By clicking, you agree to our Terms & Conditions , Privacy and Data Protection Policy

Related Articles

  • How To Create a Cash Flow Forecast for Your Business
    Money Talk

    How To Create a Cash Flow Forecast for Your Business

    Creating a cash flow forecast needn’t be a headache for you and your business. This crucial practice can be achieved following our simple steps and advice.

    ·5 min read
  • What Are the Best Accounting Options for My UK Business?
    Money Talk

    What Are the Best Accounting Options for My UK Business?

    Finding the right accounting solution is crucial for every business. Accurate accounting ensures filing of accounts to Companies House, as well as your company tax return to HM Revenue and Customs (HMRC), is significantly easier. There are many ways to do your company accounts, how do you choose?

    ·3 min read
  • Best Idea Management Software To Spark Innovation
    Better Business

    Best Idea Management Software To Spark Innovation

    Generating ideas can be time consuming, but proper idea management software can help you make the most of these ideas. In this article, we delve into the 10 best idea management software, so your ideas don’t have to go down the drain.

    ·13 min read
  • Taxes for UK Business Owners: 2022/23 Tax Rates, Thresholds & Allowances
    Money Talk

    Taxes for UK Business Owners: 2022/23 Tax Rates, Thresholds & Allowances

    Our guide for owners of private limited companies helps you navigate the changing tax rates and allowances in 2022/2023.

    ·8 min read
  • 6 Ways To Get Paid Quicker as a Freelancer or Small Business
    Money Talk

    6 Ways To Get Paid Quicker as a Freelancer or Small Business

    Business cash flow can cause you a great amount of stress, and one main reason stems from late payments. Thankfully, you can take actionable steps to prevent this from happening, and get paid quicker. Read on to find out more.

    ·4 min read

Tips to run your business smarter. Delivered to you monthly.

We’re using cookies! What does it mean?