HM Revenue and Customs (HMRC) has announced that any refunds of overpaid tax will be paid as soon as the return has been processed.
As we enter a new tax year, the revenue is encouraging people to file their tax returns as soon as possible as this can help with budgeting, as well as getting any refunds quicker.
Nearly 300,000 "early bird" taxpayers filed their self-assessment return in the first week of the new tax year, with some 295,250 returns filed between April 6 and 12, according to HMRC.
Some 67,870 returns were received by HMRC on April 6, the first day of the new tax year.
The window for filing self-assessment returns for the 2023-24 tax year is April 6, 2024, to January 31, 2025.
Filing tax returns early can help with budgeting, the revenue explained.
In total, HMRC has returned over £1.2billion in overpaid tax on flexible pension withdrawals
GETTY
People can set up a budget payment plan to make weekly or monthly direct debit payments towards their next self-assessment tax bill.
They can also check the HMRC app to see if they are due a refund. The revenue body said, "refunds of overpaid tax will be paid as soon as the return has been processed".
Myrtle Lloyd, HMRC’s director general for customer services, said: "Filing your self-assessment early means people can spend more time growing their business and doing the things they love, rather than worrying about their tax return."
In March, HMRC halted plans to shake up its helpline services, following an outcry from a range of bodies. The plans would have seen the self-assessment helpline closed between April and September.
HMRC said it is enhancing and expanding its digital services to give customers quick and easy ways to manage their tax affairs.
Furthermore, in the first quarter of this year, HMRC refunded over £42million in taxes it shouldn't have levied on flexible pension withdrawals.
This brought the total tax repayments for the tax year to more than £198million, a record sum.
In total, HMRC has returned over £1.2billion in overpaid tax on flexible pension withdrawals.
John Chew, a specialist in pension, tax and estate planning at Canada Life, said people are still being "caught out" by the tax system almost a decade on from the introduction of the pension freedoms.
Although overpaid tax can be reclaimed, the data shows record amounts of tax continue to be overpaid, he said.
Chew commented: "There must be a better way of managing these withdrawals, especially if people are targeting a specific reason to use the money and find themselves short due to emergency tax being applied."
He then offered a tip to ensure those affected don't end up paying too much. Chew said: "While we wait for the tax system to catch up with the freedoms, a good tip for people who are making a pension withdrawal for the first time is to request a small withdrawal of say £100.
LATEST DEVELOPMENTS:
"That will generate a tax code from HMRC which the pension provider will apply to any subsequent withdrawals."
He continued: "That will result in the tax being taken at source being far more accurate in many more cases, not only reducing the burden of paperwork but equally importantly the customer receiving a more accurate withdrawal in the first place.
"It's also worth noting that any change in tax position during the course of the year, resulting in a new tax code being issued by HMRC, should also be shared with your pension provider as a matter of course. This will help identify any differences in the tax being applied and allow for earlier intervention if required."
