Ten reasons why it pays to get your tax return done early
January is a busy time for the self-employed and HMRC are in the thick of it with Self-Assessment Tax Return season. It was reported that 2.6 million people still had not completed their Self Assessment Tax return by 29 January this year, just a mere 2 days to beat the deadline of 31 January and avoid an immediate £100 fine from the taxman.
It will come as no surprise to you then that the 31 January is the busiest day for filing tax returns and based on HMRC's track record of instability issues with it's Online Services, why take the risk of being fined and being on the wrong side of HMRC?Let's take a look at ten reasons to file your Self-Assessment Tax Return early, as well, of course, to avoid sleepless nights in the run up to 31 January!
1. It takes time to register
If you are newly self-employed, well done for getting this far and having trading income to report to HMRC. You may not be aware that, unfortunately, you can’t just turn up and file a Self Assessment with HMRC - you need to register first and this can take time, especially if you leave it to the very last minute during HMRC's busiest period.How long you ask? That depends on when you register. If you are organised and plan in advance it shouldn't take more than a couple of weeks to apply and receive your Unique Taxpayer Reference (UTR), which is sent to you in the post. You use your UTR to register for HMRC Online Services and by doing so you are formally advising HMRC that you are self-employed and will be submitting Self-Assessment Tax return. HMRC also send through a security PIN after they send out your UTR number, again by post.You can see now why it can take minimum of two weeks to get fully registered and if you leave it the last minute, it could take much longer due to HMRC being run off their feet with submissions.Why put yourself through undue stress ? Get organised and register today, and stay on the right side of the taxman!
2. It can take time to gather the information you need
Now that you are registered, you need to have various pieces of information to hand from the past tax year to complete and submit your self-assessment tax return on time.The financial information you will need includes a variety of data including P45's if you are newly self-employed, your P60 giving an overview of your expenses, invoices and bank statements for the tax year in question.If you file in January 2020 for example, you will need financial information from 1 April 2018 to 31st March 2019, so you will need to access or request records from almost two years ago, which may not be that easy to obtain immediately.
Tax doesn’t have to be taxing and filing early will give you time to get organised and avoid making unnecessary errors if you leave it to the last minute. Find out more about our Self-Assessment Service and call us to see how we can help you get ahead of the crowd.
3. You don’t need to pay the tax owed until the tax deadline
A common misconception is that you are due to pay tax as soon as you file your tax return, perhaps why millions of people leave it to the last minute!The good news is that this is a myth. If you file your self-assessment tax return early with HMRC you are not obliged to pay any tax due till the 31 January.This means that if you are super organised and submit early, you will know your final tax bill well ahead of time of payment and most definitely avoid any risk of immediate fines from HMRC if you file late.
4. Tax refunds are accelerated
Perhaps instead of a tax bill due in January you may be due a tax refund, and if that is the case, why wait?Unlike your tax bill which can be paid up to the 31 January, any tax refund you may be due will be processed pretty quickly after you complete and submit your self-assessment tax return.Furthermore, if you wait till January to submit your self-assessment tax return, you could be waiting much longer for your tax refund, as HMRC are overwhelmed with last minute self-assessment submissions.It's a no brainer, right?
5. You can stagger your tax payments via your tax code
Another benefit of filing your self-assessment tax return early could be available to you if your tax bill is less than £3,000 in a given tax year, you could pay your tax bill over a period of time via your tax code.This is a great option for employees or for pensioners, and as long as the self-assessment tax return is submitted for the deadline, which is slightly earlier at the end of December, any tax payments due can be staggered through the year from wages or pensions, helping to ease cash flow and help being slammed with a large tax bill just after Christmas.Who says the taxman isn't fair?
6. Buy yourself some time
HMRC may be more understanding if you plan ahead of time and submit your tax return early, if you do need more time to pay your tax bill. Not only will you allow yourself more time to gather funds to pay your tax bill but you also have time to discuss payment options with HMRC if needed.Doing so, well ahead of the 31 January deadline, will stand you in good stead with HMRC and ease undue stress and help with your cash flow.
7. Collecting the right amount of Tax Credits
If you benefit from tax credits or benefits you will be aware that your claims for this valuable tax relief are renewed annually by 31 July and you will need to declare your income for the last tax year by this date.If you do not submit your tax return by 31 July and you plan to claim for tax credits, an estimate of your income is made rather than the actual figure, which could lead to an over or underpayment of tax credits.Why delay? You can submit your tax return as soon as possible after the tax-year end, which means you receive the correct level of tax credits due to you.
8. HMRC’s call centres are always overwhelmed in January
Have you ever tried to get in touch with HMRC in the run up to the 31 January deadline? If you have, i'm sure you will be very familiar with their hold music.Unfortunately, HMRC do not have the best reputation for their customer service even at the best of times, so do expect long waiting times during busy periods such as these.According to HMRC’s own data, 14% of customers were left waiting for more than 10 minutes for an operator to answer their call last year, a pretty high percentage for such a long period of time.Why add more stress to the self-assessment process when you can submit your self-assessment tax return early and avoid waiting on hold with HMRC?
We deliver Self-Assessment Services Package to sole traders and directors of limited companies, contact us today to get organised and submit your self-assessment early well before the deadline.
9. You’ll avoid penalties
The penalties imposed by HMRC for late submission for self-assessment returns are tough, with an immediate £100 fine if you miss the 31 January deadline. Thereafter, you will be charged £10 a day, for up to 90 days, up until 30 April 2019. This is an addition the immediate £100 penalty, and fines beyond the 90 days continue to rise steeply and incrementally. HMRC take delayed submissions of self-assessment returns seriously and if they believe you are intentionally delaying your filing, they can charge 100% of your tax bill.
10. Your Christmas won’t be ruined
The number of self-employed workers in the UK is growing year-on-year, which means there is an ever increasing number of people experiencing their first self-assessment filing submission to HMRC. Filing early will mean you can avoid the mid-January dread felt by many freelancers and contractors, and enjoy a well-earned worry-free rest over the festive period. HMRC even used this angle in its most recent advertising push, promising taxpayers they would “find inner peace” by filing on time.
We take the pain out of Self Assessments
At Mirandus Accountants, we understand what it is like to be a small business owner, as we are a small business ourselves. As a chartered tax advisory practice, we are experts in tax, and as reflected in our testimonials, we provide tax expertise with empathy and understanding to your own unique set of circumstances.We are available right now to help you complete your tax return early so you know how much tax you need to pay and by when.
If you are due a refund, it makes perfect sense to receive this as soon as possible. We are working with many self-employed individuals and business owners who have already filed theirs and we are ready to help you too.
Contact us today to see how we can help you.
