Self assessment – SA Lee Accountancy Ltd

Why Filing Your Tax Return Early Is a Smart Move

April 18, 2025April 23, 2025S12_LE-B_H-A

When it comes to your Self Assessment tax return, it’s tempting to put it off—after all, the deadline isn’t until 31st January. But here at SA Lee Accountancy, we always encourage clients to file early. Why? Because there are some serious benefits that can save you both money and stress.

Know what you owe – and plan ahead
Filing early gives you clarity. You’ll know exactly how much tax you owe, which means you can budget for it in advance. This is particularly helpful if you’re required to make payments on account—which are advance payments towards your next tax bill. These often catch people out, especially if they’re unaware of them until the last minute.
Spread the cost
Knowing what you owe earlier means you can start setting money aside or arrange to pay in instalments if needed. You’re in control, rather than facing a big bill just after Christmas.
Avoid the January panic
January is a busy month, and the last thing you need is a tax deadline hanging over you. HMRC’s systems are also under strain during this time, and mistakes or delays can happen. Filing early helps you avoid the mad rush and gives you peace of mind.
Time to fix any issues
If there are any errors in your paperwork or questions from HMRC, filing early gives you the breathing space to sort things calmly—without a looming deadline.
Potential for a faster refund
If you’re due a tax refund, you’ll usually get it quicker if you file early. That’s money back in your pocket sooner!

So, don’t get caught out. Filing early puts you in a stronger financial position and helps you stay one step ahead. And of course, if you need a hand with your Self Assessment, we’re here to help.

Understanding HMRC Self Assessment Payments on Account

January 17, 2025April 23, 2025S12_LE-B_H-A

If you’re self-employed, a landlord, or earning additional income, you’re likely familiar with the HMRC Self Assessment process. One element that often surprises taxpayers is the “Payments on Account” system. Let’s unpack what this means, why it exists, and how you can manage it efficiently.

What Are Payments on Account?

Payments on Account are advance payments towards your next year’s tax bill. They are required if your tax liability exceeds £1,000 and less than 80% of your income has been taxed at source (e.g., through PAYE). This system ensures that HMRC receives a portion of your tax in advance, helping you spread the financial burden.

How Are They Calculated?

HMRC calculates Payments on Account based on your previous year’s tax bill. They will ask for two instalments, each equivalent to 50% of the tax owed in the prior year. These payments are due on:

31st January (alongside any outstanding tax for the prior year)
31st July

For example, if your tax bill for the 2023/24 tax year was £5,000, HMRC would require two payments of £2,500 each in January and July 2024.

Adjustments for Overpayments or Underpayments

If your income changes significantly, your Payments on Account might not accurately reflect your liability for the current tax year. Overpayments will be refunded or offset against future bills, while underpayments could result in an additional “balancing payment” due the following January.

To avoid surprises, consider using our tax planning services. At SA Lee Accountancy Ltd, we can review your estimated income and adjust your Payments on Account if necessary, ensuring you pay the right amount.

Managing Payments on Account

Planning ahead is crucial. Here are a few tips:

Budget Throughout the Year: Set aside a percentage of your earnings for tax to avoid scrambling for funds when deadlines approach.
Claim Tax Reliefs and Allowances: Make sure you’re claiming all available reliefs to reduce your liability.
Use Time Wisely: If your business has seasonal income fluctuations, reach out to us to discuss adjusting your payment schedule.

Need Help Navigating Self Assessment?

At SA Lee Accountancy Ltd, we understand that navigating HMRC’s processes can feel overwhelming. Whether it’s calculating your liability, managing Payments on Account, or reviewing your overall tax strategy, we’re here to support you.

Get in touch with us today to take the stress out of tax season and ensure you stay on top of your obligations with confidence.

Changes to Self-Assessment Filing Threshold: What You Need to Know

October 13, 2024April 23, 2025S12_LE-B_H-A

The UK government has introduced a significant change to the self-assessment tax filing process for high earners. Individuals earning over £150,000 per year through the Pay As You Earn (PAYE) system are now required to file a self-assessment tax return, marking a shift from the previous threshold of £100,000. This update simplifies tax obligations for many and could reduce the administrative burden. At SA Lee Accountancy Ltd, we’ll explain what this means for you and how to ensure you’re fully compliant.

Why Has the Threshold Changed?

The new threshold of £150,000 reflects the government’s aim to simplify tax filing for those whose tax is primarily handled through PAYE. Previously, earners over £100,000 were required to file a self-assessment, even when there was little complexity in their tax situation. This increase is expected to reduce the number of unnecessary self-assessment filings, giving taxpayers more time and reducing paperwork for both individuals and HMRC.

Impact on High Earners

For those earning between £100,000 and £150,000, this change means they no longer automatically need to file a self-assessment, provided their income is solely through PAYE. This can help streamline their tax process. However, if you have additional income sources such as rental income or dividends, you may still need to file a self-assessment. It’s always best to verify your tax obligations, even if your income falls within the PAYE system.

For individuals earning over £150,000, self-assessment remains essential. It’s important to file returns on time to avoid penalties and to ensure all income is correctly reported. You may also want to explore ways to optimise your tax situation, such as through pensions, charitable donations, or other available reliefs.

Key Considerations for Planning

Although the increased threshold reduces the filing requirements for many, this is no time to overlook your tax planning. Effective tax management remains important, particularly for those nearing the £150,000 threshold. By staying informed about deductions and allowances, such as pension contributions and investment reliefs, you can ensure that you’re maximising your financial efficiency.

At SA Lee Accountancy Ltd, we advise all high earners to review their tax situation regularly to ensure compliance and avoid any unnecessary penalties. We can help you understand your full tax obligations and offer guidance on managing your self-assessment process effectively.

Conclusion

The increase in the self-assessment threshold from £100,000 to £150,000 is a positive development for many high earners, reducing their tax filing burden. However, if you’re earning over £150,000, it’s crucial to stay proactive with your tax planning and compliance. If you’re uncertain about your filing requirements or want to explore tax-saving opportunities, contact SA Lee Accountancy Ltd for expert advice, we look forward to hearing from you.