Don't Let it Give You a Fright!
31st October 2013 is the deadline for the filing of paper tax returns for the tax year ended 5th April 2013 (2013 tax return), but the milestone doesn’t have to be as scary as it sounds – despite sharing its place on the calendar with Halloween!
It pays to file your self assessment tax return prior to the deadline:
Reduced risk of errors
The last thing you want to do is rush your tax return at the last minute. This is more likely to result in costly errors that could hit you and your business hard in the pocket. By getting your tax return completed in advance of October 31st your information should be far more accurate. HMRC are becoming less forgiving when it comes to careless errors, with taxpayers often hit with up to 30 per cent of the tax at stake for such mistakes.
By preparing your tax records well in advance your accountant will have ample time to assess if there are any tax planning opportunities available, such as tax reliefs and allowances that could save you money. Remember, the tax office has no obligation to help you save tax.
Avoid late filing fines and interest
Don’t let you and your business be affected by harsh late filing penalties. If you are late with your tax payments you will also face interest and possible late payment fines.
As soon as you have prepared your 2012-13 tax return, your tax liability can then be calculated. Your income tax liability for your 2013 tax return is due by 31st January 2014; regardless if you file your return early. The sooner you prepare your return the sooner you can assess your finances and decide what you need to set aside to cover your tax bill.
It is said more than 80 per cent of taxpayers now opt to file their tax returns online, allowing returns to be filed by 31st January 2014. However this clashes with the festive period and New Year festivities, meaning many taxpayers leave their finances until the New Year. Why not get it done ahead of the holidays so you can rest easy over Christmas?
What if I miss the October deadline?
All is not lost. You still have the option of filing your tax return online- in which case the filing deadline is extended to 31st January 2014. Registering to file your return online takes some time though, so don’t leave it until the last minute.
Don’t need to file a tax return?
HMRC will write to on an annual basis if they think you need to file a tax return. However, if your circumstances have changed and you believe you no longer need to file a return it is important you contact them at your earliest convenience. If they agree with you they will remove you from the self-assessment system.
I think I need to file a tax return
You may need to complete a tax return if any of the following apply:
- Have become self-employed
- Have become a director
- Receive high levels of savings/investment income
- Your annual income is over £100,000
- You have Capital Gains tax to pay (e.g. sale of a holiday home)
- Receive untaxed income (e.g. rental or savings income)
There are a number of other instances when a tax return may be required, although these are less common. If you believe you are eligible for self-assessment you need to inform HMRC by 5th October following the end of the tax year in which it happened.
The tax year runs from 6th April to the following 5th April.
For instance, if your self-employment began in January 2013, that would fall into the tax year ended 5th April 2013. Subsequently, you need to inform HMRC of your eligibility by 5th October 2013. But it’s best practice to inform HMRC if you think you need to complete a tax return as soon as possible; don’t delay or leave it to the last minute.
Late filing penalties
Small business owners and taxpayers should note that failure to file a tax return on time leads to automatic penalties being issued by HM Revenue and Customs (HMRC).
Even if it’s one day late you will receive a fixed penalty of £100 – this applies even if you have no tax to pay or have paid the tax you owe. The late filing penalties can rise to over £1,600 or more if you are more than twelve months late filing your return.
We can help
The costs of delays in dealing with your affairs can be severe, so you should avoid leaving your tax return until the last minute. Your local TaxAssist Accountant would be happy to provide you with the following services:
- Register you with HMRC for Self Assessment and any other area of tax applicable, such as VAT or registration as an Employer
- Prepare your tax return for you and consider any tax planning opportunities
- Calculate your tax liability and advise you of the amount and due date of any payments to be made
- Review HMRC correspondence and liaise with HMRC on your behalf. This can be really useful if they are issuing you incorrect tax codes or are taking a long time to issue you your tax refund
Your local TaxAssist Accountant can take care of your tax affairs and responsibilities, leaving you free to concentrate on your business. Contact us today to find out more about what we can do for you on 0800 0523 555
By Jo Nockels
Last updated October 2013