With the nights drawing in, now is a good time to shine the light on your finances and file your tax return early to avoid the winter blues.
The one good thing about the tax return deadline is that it always remains the same, which means that with a little bit of organisation and the help of your accountant, you should be able to avoid facing penalties by maintaining easily accessible and up-to-date records of your income and expenses throughout the year.
Yet people still leave it until the last minute – 2.6 million taxpayers had still not filed their return two days before the 31st January 2018 deadline.
The better your record keeping, the easier it will be for your tax return to be completed accurately and well before the deadline. Also, if you’re expecting a refund or your income varies throughout the year, our article explains why you shouldn’t delay filing your tax return.
Time costs money
If your financial affairs changed this year, then putting them in order sooner rather than later will give you the space to think about any tax planning opportunities available to you.
It also allows time for bank statements and any other financial documents you may need to file the return to be collated. Apps like Receipt Bank make it much easier today to help you keep track of all those bits of paper that build up over the months.
File now, pay later
Calculating your tax liabilities and filing your return now will allow you time to start budgeting and managing your cashflow, and to plan for paying any tax you may owe. Speeding through your tax return at the last minute increases the risk of mistakes being made, and HM Revenue & Customs has declared it will – and does – issue fines for errors. And if you pay your tax bill late, HMRC will charge you interest and possibly even late payment penalties.
Filing your tax return early does not mean you are obliged to pay any tax liability before the normal due date of January.
Get a tax refund sooner
Refunds of tax can often arise for employees or directors when HMRC has made errors with its tax codes. Also, it is not unusual for building subcontractors operating under the Construction Industry Scheme to receive tax refunds.
Therefore, the earlier you file your tax return, the sooner any refund you may be eligible for will be processed. That will mean any money owed to you by HMRC could be gathering a few months’ extra interest in your bank account. So why wait until January when refunds usually take longer to be issued as this is HMRC’s busiest time?
Beat the deadline
By delaying the inevitable, you could risk missing the tax return deadline and face being issued with an automatic £100 filing penalty, no matter how much tax you had outstanding. If your tax return becomes more than three months late, £10 daily penalties will start building up until they hit a £900 peak.
Should the return become more than six months late then a penalty of the higher of £300 or 5% of your tax due will be charged. The same level of penalty is applied again if the return becomes over 12 months late. All of these penalties are in addition to one another, and as a result of this the penalties for a late tax return could hit more £1,600.
We can help file your tax return
Tax has become an ever-changing and increasingly complex field and unless you have expert knowledge, you may be left bewildered and miss out on all the reliefs you are eligible for. Without the help of an advisor, you could end up paying too much tax without realising, or accidently pay too little and risk an investigation.
So why wait, call your local TaxAssist Accountant today on 0800 0523 555 today, beat the deadline and be safe in the knowledge that you can be relaxed about your tax.
By Jo Nockels FCCA
Last updated October 2018