The benefits of having your tax return filed early
The past few years have seen increasing numbers of people filing their tax returns early – in 2023 more than 246,000 submitted their tax returns between 6th to 12th April. Below, we explain why...
Receive your tax refund earlier
There are many reasons why you may be due a tax refund, including excessive payments on account based on the previous year's income, and for employees and directors where HM Revenue and Customs (HMRC) have made errors with their tax codes. Building subcontractors who have had tax deducted at source through the Construction Industry Scheme (CIS) are often in a tax refund position.
Therefore, the sooner you file your tax return, the sooner any refund you may be due can be processed.
You don't have to pay your tax bill early
Calculating your tax liabilities and filing your return now will allow you time to start budgeting and managing your cashflow so you are ready to make your tax payment. You can plan for paying any tax you may owe by the deadline of 31st January. Filing your tax return early doesn't mean you have to pay your tax sooner.
Pay your tax through your tax code
If you owe less than £3,000 in tax and file your tax return before 30th December, you may be able to opt to have your tax liability collected through your tax code. This can be a great option to spread the cost and ease the pressure on your cashflow.
Get friendly and local tax return help
Contact TaxAssist Accountants for a free, no-obligation consultation.
Or contact usCalculate your tax bill for cash flow planning
Many businesses are trying to forecast their cash needs in the short/medium term and one of the biggest expenses the self-employed will have will be their income tax bill.
Knowing exactly how much tax will be due by 31st January will help you to plan effectively. You can arrange how you will be able to pay it, be that through bank funding or by preparing to engage with HMRC and asking for a phased payment arrangement when the liability falls due.
Remember, just because you file your return early does not mean that you must pay the liability immediately. Regardless of when you file your tax return, the tax won't be due until 31st January 2025.
Have more time to focus on your business
If business is quieter for you at the moment, your income tax return is a task that you could get done and out of the way. Otherwise, plan it in your calendar for a quieter time, perhaps this is before the Summer season or just after.
This means that when business is busy you won't need to be juggling that alongside getting your tax return ready. Leaving you with more time to focus on business instead of your tax return.
More time to prepare
The more time you give yourself to gather all the information you need to prepare your tax return, the better. This should reduce the risk of errors and mistakes being made, which may not only be costly, but could also mean you end up paying more tax than you need to and having to re-submit your tax return.
More time to plan for any tax savings
If your affairs have changed this year, for example you've made a significant amount of additional profit, preparing your tax return early may reap rewards. It gives you the time to consider any tax planning opportunities which could lead to tax savings.
Avoid penalties and late payment interest
If you file your tax return late, you will be issued with an automatic £100 late filing penalty. If your tax return becomes more than three months late, £10 daily penalties start to accumulate up to a maximum of £900.
A penalty of the higher of £300 or 5% of your tax due is then charged if your return is six months late and again if it becomes over 12 months late. All of these penalties are in addition to one another; rather than in place of. This can mean penalties for late tax returns can top over £1,600.
Collecting the right amount of Tax Credits
If you are in receipt of tax credit or benefits, your claim needs to be renewed annually by 31st July, which involves letting the Tax Credit Office know your income.
While you may submit temporary estimates, it is preferable to submit the actual figures as soon as possible to avoid you being over or underpaid until the Tax Credit Office has received your actual figures.
How we can help
TaxAssist Accountants can help you complete your tax return early, so you know how much tax needs to be paid and by when.
If you are due a tax refund, it makes great sense to receive this as soon as possible. We work with many self-employed individuals and business owners and we can help you too.
If you need help with your self-assessment affairs, call us today on 01945 425042 or drop us a line using our online enquiry form.
Need support with your tax return?
Contact TaxAssist Accountants for a free, no-obligation consultation.
Or contact usLast updated: 8th October 2024