Why should I Complete my Tax Return Early?
Question:
Tax returns do not have to be filed with HMRC until 31 January each year, so why shouldn’t I just leave it until then?
Answer:
Subject to popular belief, tax returns can be filed earlier and in actual fact, there are some very compelling reasons why you should. Please read on if you want to understand the benefits of completing your tax return early.
At Monetta, we believe there are 8 very good reasons why you should complete your tax return as early as you can. Each of them is explored in more detail below:
It takes time to register
If this is your first time completing a tax return, then you will need to register with HMRC and failure to do so may result in HMRC issuing you with a fine. HMRC are notoriously slow at the best of times, but during busy times, it is worse! To avoid delays and potentially missing the tax return submission deadline; wouldn’t it make sense to beat the rush and register early?
Get your refund early
If you have overpaid tax and therefore, are due a refund, or if you are a sub-contractor who has suffered CIS during the year, the sooner you file your tax return, the sooner HMRC will refund the tax that is due back to you.
Better budgeting
Once your tax return has been completed you will know what your liability is. Whether you simply pay your tax liability in one go every January, or whether you make tax payments on account in July as well; wouldn’t it be better to know what you owe sooner rather than later?
Avoid mistakes
Everyone one knows the old adage, “more haste, less speed”, makes sense. Things are never done well in a hurry especially when HMRC can issues penalties for filing incorrect tax returns. At Monetta, we believe that by completing your tax return early, you will reduce the chance of making a mistake, this has got to make sense.
Identifying opportunities
Our belief is that all taxpayers should take every legal means possible to reduce their tax burden to a minimum. Therefore, identifying planning opportunities and reviewing whether you are entitled to any exemptions is key to reducing the overall tax burden. However, if tax returns are not completed until the last possible opportunity, these opportunities may go unnoticed.
Avoid penalties
HMRC will issue a penalty if a tax return is submitted late and will issue further penalties where a tax payment isn’t made on time.
Mortgages and other loans
As accountants and tax advisers we are asked frequently throughout the year to provide banks, building society and other finance houses with confirmation of an individual’s earnings. This is usually for remortgaging purposes or individuals looking to secure finance for other reasons; either way, the broker or the bank usually want confirmation of income details as filed with HMRC. How can we supply that information if the tax return hasn’t been completed.
Don’t follow the herd
Millions of tax returns are submitted to HMRC every year, and many of those are not filed until close to the tax return deadline. This means that HMRC as well as your accountant are busier on the run up to the deadline (January each year) than they are earlier on in the tax cycle. Therefore, on the off chance that you will need to speak to HMRC or need your accountant’s undivided attention, it would be better if you didn’t follow the herd.
Given the eight reasons above, we believe that it makes sense to complete your tax return as early as you can.
Call us today
If you need to complete a self-assessment tax return, why not ask us to do it for you? Our qualified tax experts have been doing it for years and they will make the process very straight forward for you. In addition, they will make the best endeavour to ensure you pay as little tax as you are legally obliged to.
Please see here to contact your local office but before you do, please see our tax return checklist which is a summary of all of the items which are potentially reportable on your self-assessment tax return.