The advantages of filing your 2023-24 tax return early

What’s the point of filing your tax return early when you’ve got until the end of January next year to do it online? Plenty! There are a few changes this year that you might not know about, not to mention the benefits from filing early regardless.

First, though, let’s recap the deadlines…

The Self-Assessment filing deadlines

The deadline for filing your 2023-24 Self-Assessment tax return online is 31 January 2025 (it’s also the date to pay any tax due). An earlier deadline of 30 December 2024 applies if you owe £3,000 or less and want to pay the tax you owe through an adjustment to your PAYE code.

While these dates are some way off, there can be advantages to filing your 2023-24 tax return early…

For self-employed taxpayers…

If you prepare your accountsto any date other than 31 March, 5 April or a date in between, there’ll be more work involved in calculating your taxable profit for 2023-24. That’s because the 2023-24 tax year is the transition year between the ‘current year basis’ accounting method (which applied for 2022-23 and earlier tax years) and the ‘tax year basis’ method (which applies from 2024-25 onwards).

If your accounting year end doesn’t correspond to the tax year end, your profit for 2023-24 will comprise:

Profit for the year up to your accounting date ending in 2023-24 (the standard part), and
Profit for the period from the end of your accounting period to 5 April 2024 (the transition part).

Example

If you prepare your accounts up to 30 June, the standard part is the year to 30 June 2023; the transition part is the period from 1 July 2023 to 5 April 2024. The latter is found by apportioning the profits for the year to 30 June 2024. See the HMRC page Work out your transition profit for detailed information.

In summary

Where your accounting period doesn’t correspond to the tax year, there will be more than 12 months’ profit to assess in 2023-24.

👉 If your accounting period ends on 31 March, 5 April or a date in between, these are treated as corresponding to the tax year. So, you can breathe a sigh of relief if your year end is either 31 March, 5 April or anytime in between (1-4 April). If that’s you, skip ahead to ‘Earlier repayments’, below.

Tax on the transition part of your profits

👉Read this section if your accounting year end date doesn’t correspond to the tax year end date.

The transition part of the profits, less any overlap relief, is automatically spread over five years (2023-24 to 2027-28 inclusive) unless you request for these to be assessed earlier (for example, if they would be taxed at a higher rate in any of the later years). Consequently, your tax bills may be higher than normal for the next five years if spread across the five years.

(Note: 2023-24 is the last year where relief can be given for any unrelieved overlap profits that arose on commencement or a change of accounting date.)

👉Filing your 2023-24 tax return early will give you more time to ensure you have the savings available to pay the higher bills or arrange to pay in instalments if needed. It’ll also give you time to understand how to calculate it or reach out to your accountant.

For employed taxpayers…

If you are employed, you may need to file a tax return if you have other sources of income, such as rental or investment income. If you owe less than £3,000, you can elect for the tax to be collected through your PAYE code if you file your return by 30 December 2024. This saves you paying the tax in a lump sum, providing an interest-free instalment option.

👉Filing the return now the 2023-24 tax year has ended ensures you don’t miss the 30 December 2024 deadline.

Earlier repayments

If you have overpaid tax for 2023-24, the sooner you file your tax return, the sooner you can get the repayment. The money is arguably better in your bank account than in HMRC’s😊.

👉Filing your 2023-24 return is the only way to get the refund!

Certainty about your tax bills

Once you’ve filed your return, for 2023-24 or other years, you can relax knowing how much you need to pay by 31 January 2025 (and, where applicable, whether you need to make a payment on account for 2024-25 on 31 January and on 31 July 2025 too). This will help you budget for your tax bills and organise your finances to make sure you have the necessary funds available.

If you know you’re likely to struggle to pay your tax bill(s) on time, you can set up a Time to Pay arrangement to allow you to pay your bill in manageable chunks/instalments. You may be able to do this online.

👉Filing the 2023-24 return is the only way to know how much tax you will be asked to pay on 31 January 2025.

Peace of mind

Filing your tax return ahead of the deadline provides peace of mind that the job has been done and has been ticked off the ‘to do’ list – something all our Hub members are encouraged to do so they can sleep better in January!

👉Filing your 2023-24 return will give you a few good night’s sleep before 31st January 2025 😉

📢❕ The information in this blog post was correct at the time of writing. Please check with your accountant for the latest information or, if you don’t have an accountant, join the Financial Resilience Hub to get access to one of ours! Alternatively, keep an eye on HMRC’s website for updates.

ABOUT THE AUTHOR

Helen Monaghan is a Chartered Management Accountant, accredited NLP Practitioner & Finance Coach. Both a psychology graduate and an accountancy graduate, she has authored three business books, which beautifully bring together psychology, finance, and tax to empower the reader about money. Helen is the CEO of HM Finance Coaching & Advisory Ltd, a company that provides financial education and business mindset coaching to small businesses across the UK, in addition to accountancy services for limited companies in Scotland and across the UK. Helen is also the founder of The Financial Resilience Hub – find out how we can support you, and your business, to be financially resilient through our monthly membership.