As the clock ticks down on HMRC’s Self Assessment Tax Return deadline, a firm of West Midlands accountants has declared January 30 ‘Tax Dread-line Day’.
Research by Prime Accountants shows a sharp increase in search behaviour around the topic of Self-Assessment Tax Returns the day before the deadline, before peaking on January 31.
The last-minute rush to file the day before and on deadline day itself have prompted Prime to coin the term Dread-line Day, as this is when the fear of receiving a fine finally overtakes the need for reward, according to psychologists.
A combination of fear around the potential cost of a tax return and common misconceptions around when payment needs to be made are adding to the dread of completing a Self Assessment Tax Return and influencing the decision to leave it until the last minute.
Google Trends data also provides insight into the locations of those leaving their return until the last minute.
Data from January 30 and 31, 2024 shows UK searches for ‘self assessment tax return’ were most popular in Congresbury in Somerset, Nazeing in Essex, Chobham in Surrey, Broxbourne in Hertfordshire and Lechlade-on-Thames in Gloucestershire during this timeframe.
Data released by HMRC shows that 778,068 returns were filed on 31 January 2024 for the tax year 2023-24, out of the 12.2 million returns due, including 32,958 customers who filed between 11pm and 11.59pm on deadline day.
To better understand the psychology behind the dreaded tax return and identify ways to help clients overcome it, Prime has enlisted the expertise of Ruth Kudzi, founder and CEO of Optimus Coach Academy and a distinguished coaching psychologist, consultant, trainer and speaker.
Ruth revealed the human instinct to leave important tasks to the last minute is down to two key issues.
She said: “As humans we usually act on something because of fear or reward. If we feel like we will be rewarded for doing something, we’re more likely to act early and get that dopamine hit.
“With tax returns, unless you know you’re going to get money back, there isn’t a reward. So the deadline works more on threat and the fear around receiving a fine.
“However, the threat isn't strong enough to make us act straight away. If we were fined every month for not filing, we would do it much earlier.
“People may also fear how much the tax return will be. When we are in fear mode, we have higher levels of adrenaline and stress and are less likely to respond in a rational way.
“When we are fearing something, we don't have as much cognitive capacity to make that decision and even when we are expecting something bad, we may still choose to avoid it.”
Paislei Godley, associate director at Prime Accountants, believes that part of this fear is the result of a common misconception that payment must be made at the time a tax return is submitted, which Prime is trying to address.
She said: “We know from experience that many clients put off completing their Self-Assessment until the last minute because they think they need to pay it up front.
“Payment is due on the set payment date of January 31. If you are struggling to pay you can apply for a payment plan – however, to do so you must have filed your tax return. So the sooner you file your return, the sooner you can plan for how you can pay this.”
To tackle the challenges of last-minute filing and encourage its clients to prepare well ahead of the ‘dread-line’ Prime has introduced a tiered pricing scheme that aims to provide that all-important reward that prompts people to act.
The accountants has implemented a fee structure for the preparation and filing of Self-Assessment Tax Returns that incentivises clients to act sooner.
Paislei added: “For our tax team, January is understandably one of the busiest times of the year and we need more resources available at this time.
“The fee structure gives our clients time to plan and encourages them to look after their own finances while having access to support at the right time, and it takes some of the stress away from our team.”
Find out more about Tax Dread-line Day and get help with your Self Assessment Tax Return.
