5 Reasons to do your tax return early this year

5 Reasons to do your tax return early this year

Across Britain there’s more than 11 million people required to submit a self-assessment tax return, and as many as 400,000 file their online self-assessment tax return on deadline day. 
For many of those people 31st January is a date that creates anxiety, whether it’s the stress of a last minute rush to file the return by the deadline or wondering where to find the money to pay the tax bill so soon after an expensive Christmas. 
 
So with the end of the tax year fast approaching here’s 5 reasons why you may want to complete your tax return early this year:

1.Nobody wants an unexpected last minute tax bill.  If you prepare your tax return in the summer then if there is tax to pay, at least you have several months to plan for it.  Equally if you are due a tax refund (e.g. subcontractors in the construction industry which often overpay tax due to the effects of CIS deductions) then the sooner the tax return goes in then the sooner you’ll receive your refund.
2.Reduce payments on account.  For those taxpayers that pay payments on account in January and July, if your income has reduced from the previous year then your payments on account may overstate your tax liability.  In this situation if you complete your tax return prior to 31st July then that payment on account will automatically be reduced.
3.Avoid penalties.  When leaving your tax return to the last minute there’s the possibility that something unpredictable could happen near the deadline, such as illness or receiving a large order that takes up all of your time, which would leave you unable to file the return on time.  Even if the return is a few minutes late HMRC will automatically impose a fine starting at £100.  Consider putting time aside soon after the end of the tax year, so if the unexpected happens then you still have time to file the return on time.
4.Transactions will be fresh in your memory.  If you prepare accounting records after the end of the tax year then an individual preparing their tax return in April will have a better of memory of transactions in the last 12 months, rather than a further 10 months later in January.  There’s also the scope for invoices and receipts to go missing the longer a tax return is left.
5.Have a relaxing Christmas and New Year.  One sure-fire way to ruin your festive period is thinking about (or even preparing) your tax return.  According to HMRC data 1,944 individuals submitted their tax returns on 25th December 2016, and a further 6,200 on boxing day. 

We’re here to help with advice on record keeping and preparing your tax return early, contact us here for further assistance.