Every year hundreds of thousands of taxpayers wait until the very last minute to complete and submit their annual Self-Assessment tax return.
Although the official deadline for submitting a return online is 31 January each year, taxpayers can submit a return from the previous year once the new tax year begins on 6 April.
Inevitably taxpayers often leave preparing and completing their annual tax return until the last minute, which could leave them at a disadvantage.
It may feel like there is all the time in the world to prepare your submission, but have you considered the advantages of submitting your Self-Assessment tax return early?
To give you a clearer idea of the advantages of completing your tax return earlier this year, we have covered some of the benefits below:
A clearer vision of future cash flow
By completing your return earlier in the tax year, you will know what tax you need to pay sooner. This will allow you to plan and allocate funds to paying your tax bill when it falls due in January, rather than forcing you to find a large sum of money in a short space of time, which can be stressful.
Get tax rebates sooner
The earlier you submit your Self-Assessment tax return, the quicker you are likely to receive any tax rebate due to you. By giving HM Revenue & Customs (HMRC) your return earlier they are likely to be dealing with fewer claims, which means you will be higher in the queue. You don’t have to wait until next year to receive your tax rebate, so why not benefit from it now.
Plan more effectively
By getting an early picture of your current tax affairs you may find it easier to arrange your income and assets in such a way as to take advantage of the various tax reliefs and allowances on offer to individual taxpayers, such as the ISA allowance, pension reliefs and tax-efficient investment schemes, such as the Enterprise Investment Scheme (EIS). By carefully managing your finances you could substantially reduce your overall tax liabilities for the year.
Access benefits and credits
Taxpayers who receive means-tested benefits or Tax Credits must renew their claim every year by 31 July. For those who complete tax returns, they would usually provide estimated figures, but it makes sense to provide HMRC with evidence and accurate figures from your tax return to avoid complications or the risk of having to repay money in future.
Proof of income
If you are seeking finance or looking to make a large purchase, such as acquiring a mortgage on a new property or a remortgage on an existing home then having an up-to-date tax return can be vital. Those who pay tax via a Self-Assessment tax return, rather than PAYE, may not have the necessary proof of income to show a lender, like a payslip, and lenders will want to see two or three years proof of income. Having a completed tax return for the previous tax year can help to demonstrate how much you earn.
Leaving it to the last minute to complete a tax return causes lots of stress and may increase the potential for omission or errors. These costly mistakes may lead to penalties or an HMRC enquiry and so it is worthwhile giving yourself longer. Preparing your tax return earlier will also give your accountant more time to review and check it, especially as December and January are busy times for the profession.
Although Self-Assessment Tax returns can be submitted at any time after the new tax year begins, getting your return done early doesn’t mean you will have to pay tax earlier.
Giving it more time means you can plan better and work with advisors to minimise your tax burden.
Davis Grant is all about getting ahead of these matters, so you have more time to take action.
If you intend to prepare and submit your tax return earlier this year to enjoy the benefits listed above, now is the time to starting gathering important documents, such as:
- Banks issue interest statements
- Employers P60s
- Receipts and expenses information
- Pension and savings information.
If you are an existing client of ours, you can submit these documents to our dedicated tax team as soon as they are available so that we can help you to prepare your return early.
Don’t leave everything to the last minute – tax advantage of our advice and support today!