Many people leave worrying about their Self-Assessment tax returns until the dark, cold nights of December or January, spurred on by the notion that gathering their tax return information is a problem for their future selves. However, there are many benefits that can be gained from getting your head in the game sooner rather than later.
While the deadline for filing tax returns isn’t until 31 January, there are significant financial and psychological advantages to submitting your information to us before the end of July. Here is why getting us your information early is one of the smartest moves you can make.
Getting ahead
The most immediate benefit of getting your information to us early is being able to plan for the months ahead. By calculating your liability earlier in the year, you gain a head start on future payments that may need to be made.
If your tax bill is higher than expected, you have half a year to set funds aside, adjust your business spending, or perhaps make a ‘Time to Pay’ arrangement with HMRC. Conversely, if you are due a tax refund, getting your tax return filed early means the money is back in your bank account potentially gaining a higher level of interest than it would if it was sat with HMRC.
Making life easier for yourself
Logically, it is easier to gather information while it is still relatively current and fresh in your mind. Leaving it until December to get everything over to us means that there are documents that you may have received over a year and a half ago that you need to locate. Additionally, unless you have kept on top of your expenses all year, there may be things that are missed, meaning tax savings may also be missed.
Amending your July payment on account
For those who have to make payments on account, July 31st marks the second deadline. If your income has dropped compared to the previous year, filing your actual tax return before July allows you to reduce these payments when your tax return is submitted.
Instead of paying a large sum based on last year’s higher income and waiting months for a refund, you can adjust your July payment downward to reflect your current situation.
Having your information when you need it
Often, if you are planning to apply for a mortgage, a loan, or a maybe lease in the latter half of the year, lenders will almost always ask for your latest SA302 (Tax Calculation) and Tax Year Overview. If you haven’t filed your most recent return, you are forced to rely on older data, which may not reflect your current (and hopefully higher) income level. Having the most up to date figures in front of them by July gives them a clearer picture of your situation, and helps speed things up when needed.
Avoid HMRC penalties
If you wait until the last minute and encounter a technical hurdle or something comes up that you were not planning for, you risk the £100 (or higher) late-filing penalty. Filing early removes this panic and ensures that even if a technical issue arises, you have as long as possible to resolve it.
Getting your tax return sorted early is one of the easiest ways to protect your cash flow and reduce stress. Getting organised doesn’t have to be a January nightmare and it’s much easier with the right team in your corner. Not yet a Hive client? Get in touch and let’s get you sorted.
