11th November 2016
Do you normally leave your tax return to the last minute? With most people seeing this as a dreaded chore, you are not alone!
Whilst this may be a comforting thought, how many times have you left your tax return to the last minute, only to find that there is something you don’t understand, paperwork has gone missing or your tax position is more complicated than you first thought?
Whilst those who need to complete a tax return technically have till the 31st January to submit the return (following the end of the tax year) and those who need to do it for tax year 2018/19 (which ended 5th April 2019), have till the 31st January 2019, we promise there are many reasons why you should do it as early as possible.
#1 Receive refunds faster
We bet that got your attention! Yes, if you owe HMRC tax the deadline for payment is 31st January. However, if they owe you they will pay after they have received and processed your tax return.
#2 Improve cash flow
If you are in the situation where you’re facing a tax bill and not a refund, naturally you’ll want to delay submitting your return for as long as you can! However, by knowing your tax liability, you know exactly how much you need to pay, allowing you to make a plan to start saving for the required amount.
Remember just because you submitted your tax return early, this doesn’t mean you have to pay your tax early!
#3 Time to plan ahead
Whether you’ve made a significant capital purchase or made a loss, all these changes do affect your tax position. Reviewing tax affairs as early as you can will allow your accountant time to look for opportunities to save money.
#4 More time to make amendments
We are all human and so make mistakes! It’s natural. The earlier you submit your return before the deadline, the more time you have to make any amendments.
#5 Claim all allowable expenses
The longer the gap between end of the tax year and preparation of your tax return, the greater the possibility of missing the opportunity to include all expenses that you may be entitled to deduct from your profits.
Then there is the issue of not having up to date accounting records. If this is the case it quickly becomes a nightmare locating paperwork and recalling what expenditure you incurred months ago. If you don’t include all the allowable expenses, guess what, you’ll end up paying more tax!
Being an early bird allows you more time to check claimable allowances and whether your expenditure is tax deductible.
#6 Prepare accurate figures to claim for tax credits
Do you receive tax credits? Make sure you renew your claim by 31st July. Whilst it’s true that you can submit a rough estimate to the tax credit office, it’s recommended to submit ‘actual’ figures to avoid the possibility of being both over and under paid.
#7 Avoid unnecessary fines
Filing your return late, only by a day, could end up with you being charged £100. Upto 3 months late and you’ll end up paying £1200.
Fact – even if you can’t afford the tax bill, still file your return. Fines for late payment are much lower than the fines for late filing.
#8 Avoid last minute stress
Picture this – a December with the tax return done and dusted! Everything is in order so you can enjoy a stress-free festive period! Sounds too good to be true? Well its not, getting stuck in and getting your tax return sorted early will give you peace of mind.
If you need any advice or help with your tax return please do not hesitate to get in touch with one of the team by clicking here.
have you read our previous post?