HMRC issues warning to anyone who files their own Self Assessment tax return

AHEAD of the second Payments on Account instalment for the 2024 to 2025 tax year, which is due this week (31 July), HMRC has encouraged people to file their Self Assessment tax return for the 2024 to 2025 tax year early, as this will give them options to explore flexible payment options before the 31 January 2026 deadline. While some experts said this is “sound advice” from HMRC, others said the Revenue are living in a “utopian dreamland”. 

Customers filing their Self Assessment tax returns early, HMRC says, will know how much tax they owe and may be able to reduce their next Payment on Account if their income has decreased. It also means that if a refund is due, it can be received sooner.

Myrtle Lloyd, HMRC’s Chief Customer Officer, said: “Filing your tax return early, making payments on account and setting up a manageable payment plan are three simple steps you can take to help stay in control of your tax affairs, so why not tick off all these at once? The deadline for the next Payments on Account is due and it’s the ideal opportunity to file your next tax return early and get a big chunk of tax admin crossed off your to do list.”

HMRC is expecting more than 12 million people to file a tax return this year and pay any tax owed. And for many, they will pay in instalments known as Payments on Account. These payments help customers spread the cost of their tax bill by making two instalments, which is half the amount of tax a customer owed last year.

Chloe Mount, Director at Tunstall Accounting, welcomed the announcement: “Filing your Self Assessment tax return early isn’t just about getting it off your to-do list, it can provide you with genuine financial clarity. If your income has fallen compared to the previous year, submitting your return before 31st July could give you the opportunity to reduce your upcoming Payment on Account and avoid an unnecessary overpayment.

"Likewise, if you’re due a tax refund, the sooner you file, the sooner that money can be back in your bank account. I always encourage my clients to file their tax return as early as possible in the new tax year. It gives them time to plan payments, review their tax position and make informed financial decisions based on the previous year’s data. Knowing your position early means you can respond to changes before they have a lasting impact on the rest of the year.”

Rakesh Dua, CEO at DUA Accountancy & Business Consultancy, said: "Keeping on top of tax bills and what you earn are key. It's always wise to stay in control and plan ahead, so this is sound advice from the Revenue. Having a disciplined approach to money always pays off, while cashflow management and avoiding surprise bills are key to running your finances. Getting ahead of your tax liabilities in the summer also means you can avoid stress in the winter months when energy bills are high and the days are darker."

Samuel Mather-Holgate, Independent Financial Adviser at Mather and Murray Financial, said filing early could mean you avoid mega-high interest rates if you've underpaid: “Getting your self-assessment done early will ensure your payments on account are accurate. That way there’s no risk of paying too little and getting caught by the mega high interest rates from HMRC.”

But some questioned the timing of the announcement given the difficult position many businesses are in. David Stirling, Director at Mint Mortgages & Protection, said: "What a lovely and utopian dreamland Myrtle Lloyd must be living in. Meanwhile, back in the UK, the self-employed and especially those that own businesses are struggling to keep afloat, let alone having the luxury of paying extra ahead of time.

“With the last Budget starting to really bite, increased national insurance contributions hitting businesses from last month and financial squeezes from all directions, I'm not sure many business owners are in a suitable position. Nice idea, but one that's not grounded in reality.”

Kundan Bhaduri, Entrepreneur at The Kushman Group, questioned the motivation of HMRC: “Isn't it delightful that HMRC is rebranding early tax filing as a lifestyle choice for the financially enlightened? They suggest we file our returns now, settle the July payment and swagger into January with both composure and possibly a refund. The marketing would be charming if it were not essentially asking us to volunteer as unpaid Treasury administrators six months ahead of schedule.

"Let's be frank about HMRC's motivation. This initiative serves the Treasury cashflow, not ours. The government burned through billions on furlough schemes, Covid support, and endless environmental initiatives. Now they want fiscal certainty, and they want it early.”