5 benefits of completing an early tax return

Many people do not file their Self-Assessment Tax Return until the end of the year, or even in January which can leave you working to a deadline and under pressure, and little time to prepare yourself to pay your taxes. If you have not filed a tax return before, it takes time to register with HMRC, collate your invoices, P45's, P60's, expenses and bank statements. If you plan early you can get your tax return out of the way and you can enjoy your Christmas without the dread of an upcoming tax payment

You will have time to register

If you have not previously had to file tax returns, you need to make sure you are registered in advance. This is done online and once it has been done, HMRC will issue a letter 10-digit Unique Taxpayer Reference (UTR). The account will then be set up so you can submit your online self-assessment. This can take up to 10 working days, so it is important to make sure you have registered in advance.

Self-Assessment Deadlines

  • Register for Self-Assessment – 5 October 2021
  • Paper tax returns – 31 October 2021
  • Online tax returns – 31 January 2022
  • Payment of tax owed – 31 January 2022

You will know your tax liability

When you have filed your tax return you will be aware of how much tax you are liable to pay. Completing this early gives you the time to allocate funds and claim any allowable tax reliefs.

You will need to submit a renewed claim annually by the 31 of July if you receive tax credits or benefits. the Tax Credit Office must be notified of this income.

If you have to make a 31 July payment on account, and this year's tax liability is less than the previous years, a reduction can be made rather than an overpayment of tax to reclaim later.

There is an option to have your tax liability collected through your tax code if the tax liability is under £3000 providing it is filed before 31 December.

You will have more time to allocate funds

Tax payment deadlines:

  • 31 January – any tax owed for the previous year (also known as balancing payment) and your first payment on account
  • 31 July – your second payment on account

When a tax return is filed early, you will know exactly how much you need to pay. The payment date remains the same so you will have longer to budget and plan accordingly.

You will receive an earlier tax refund

When you submit an early tax return, if you have overpaid your tax the previous year, any tax repayments will also be processed early! Due to the sheer volume of tax returns that are processed over December/January, tax refunds take much longer to process by HMRC. Receiving your tax refund early can help with cash flow and planning.

You will avoid late filing penalties

Your tax return must be filed by 31 January. If your return is 1 month late you will receive a £100 penalty, this will increase if the tax return is not filed after three months. Interest will also be changed on late payments so getting your return filed early will save you stress and money if your tax return is filed after the deadline.

Why work with us?

We can process your tax return for you, all you need to do is provide your records for us to process. We also help our clients to save money by making them aware of any reliefs and benefits that are available to them. Working with a Chartered Accountant will also give you peace of mind knowing that your tax return has been properly checked and submitted to HMRC.

If you are looking for an accountant to file your tax return, please get in touch to find your local GMP Accountants office.

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