Doing your tax return is possibly one of the top ten things people will leave to the last minute. Whether that’s because you need the pressure of the deadline closing in to force yourself to do it – or simply because other things have been more of a priority throughout the year. Did you know that by filing your tax return early, you could benefit in more ways than you expect? Here are 5 ways you’ll be better off by getting your tax return completed as early as possible:
1. Stress less
It may be obvious, but it is nonetheless an underrated benefit. By getting your tax return filed early, you can get on with the rest of your year without having the regular and nagging thought of “I mustn’t forget to do that”. With Christmas and New Year also being so close to the 31 January deadline, it means being able to enjoy the festive period without having to end it with the dread of having to start your tax return.
2. Avoid penalties and interest
Leaving your tax return to the last-minute puts you at risk of making mistakes, which does not go unnoticed by HMRC. If you’ve accidentally underdeclared your tax liability, and cannot show that you took reasonable care, HMRC are able to impose up to 30% of the unpaid tax on top of your tax bill, as a fine. Not only that, but as soon as you miss the tax deadline, you receive an automatic penalty of £100 – even if you have no tax to pay! The later you file, the more penalties will arise. If you’re not only late submitting your tax return, but also late paying any tax due, you’ll owe HMRC interest on the outstanding amount and possibly penalties. These fines rack up quickly and can become quite substantial, so it’s important to remember that they’re completely avoidable so long as you get your tax return completed correctly in plenty of time.
3. Give yourself time to save for your tax bill
By calculating and filing your self-assessment tax return early, you’ll know exactly the extent of the bill you’re facing. Getting clarity on your tax bill can offer a sense of relief and will enable you to proactively plan how to get together the sum of money by the deadline. The earlier you know, the more time you’ll have to put aside money each month. If you leave it to the last minute, your bill could come as a nasty shock, and you may struggle to get the funds together.
4. Get it sorted through your tax code
Did you know that if you file your tax return early enough (by 30th December if you’re filing online), you may be able to ask HMRC to deduct the tax you owe through your tax code, instead of having to come up with the funds? Doing this means that, if you have any income which is taxed through PAYE (pay as you earn) such as a workplace salary or pension, your adjusted tax code will allow you to pay tax monthly directly from your income. You’ll see less on your payslip or pension slip, but your tax will be taken care of. You’ll only be able to do this if your total tax due for the year is no more than £3,000 and you pay sufficient tax through PAYE.
5. Receive your refund earlier
If you’re due a refund, why wait until the end of January to receive that extra cash? Of course, you may not even know that you’re due a refund until you complete your tax return – which is yet another good reason to get it done sooner rather than later. We also don’t advise you wait until the tax deadline to file your return as issuing rebates may not be at the top of HMRC’s priority list at that time. You could end up waiting longer for your tax refund than if you had filed your tax return earlier in the tax year.
Ready to get your tax return done now?
Don’t procrastinate when it comes to doing your tax return – it needn’t be a thorn in your side. Using a self-assessment tax return service from chartered accountants means you get peace of mind that your tax return is properly prepared, every deduction and saving is claimed, and it will be submitted on time. Speak to a member of the Kench & Co tax team for a friendly and easy conversation on how we’ll help get your tax return done.