Commenting on HMRC’s announcement that the number of Self Assessment customers who file early has doubled in five years, BDO tax partner, Paul Falvey, said: “HMRC are commenting that the number of people filing on day one of the tax year has doubled and seem to be using this as a prompt to encourage others to file soon – not least because this may well lead to early tax payments.
“While early filing does indeed mean that taxpayers avoid last minute filing stress and late filing penalties, the increase in early filers might be as a result of taxpayers seeking tax refunds.
“If you think you have paid too much tax then the sooner your tax return is sent to HMRC the earlier you will get your money back.
“A common example of a tax overpayment is when too much tax has been taken from pension withdrawals.
“This overtaxing occurs because those who draw down from their flexible pension pots are currently taxed at a flat rate which doesn’t take account of their level of income or any Personal Allowances available. Of course, you can reclaim this during the year too: the latest figures from HMRC sourced by Which? reveal that more than £48m was repaid by HMRC to 15,856 people overtaxed on pension withdrawals in the first three months of this year alone.
“Rather than it being a case of taxpayers becoming more inclined to comply promptly with their filing duties, this increase in early filing seems more likely to reflect current inadequacies with other parts of the tax system.”
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