Ten benefits of doing your tax return early
Imagine it’s 15th January 2024. What’s on your list of jobs to get done this week?
If you are like many people, then it will be the ‘dreaded tax return.’ January is a very busy time in the tax accounting world because so many people leave the return to the last minute. But just think how great you’d feel if you get ahead of things this year and do your tax return early. There are several benefits to you of getting it out of the way much earlier in the tax year.
Peace of mind
When you have your tax return hanging over you all year long, probably getting emails and text reminders from HMRC and your accountant from September onwards, this builds up your sense of dread. Get the tax return done early and you won’t be bombarded with those annoying messages.
Once you have submitted your tax return, HMRC will calculate the tax owed so you’ll have accurate information to use for budgeting for most of the current year. If you leave it until January, you’ve been working on estimates all year long. Or like some clients, you won’t have the first idea of what you’ve actually earnt until you give all your paperwork to your accountant. Not having up-to-date numbers means decision making is all guesswork and you’re much more likely to make poor decisions.
Get your tax rebate early
Why wait for any tax rebate that you are due? By submitting your tax return asap after the tax year end, you’ll be able to claim any rebate due quickly meaning that money is in your bank account working for you for the rest of the year, rather than in HMRC’s coffers. Getting an early tax rebate is a great way to start the new tax year.
Time to plan
Another advantage of doing your tax return early is that you’ll have more time for tax planning strategies. When you leave the return to January you are missing out on 9 months where you could be doing something more favourable with your money to reduce your tax bill for subsequent years.
Time to gather paperwork
Unless your filing system is completely perfect, there are likely to be invoices and receipts you need to collect for online orders and sales. You may need to contact your employer for your P60 or you might need statements you’re your bank or other investments. When you do your tax return early, you have time to make sure all the paperwork is available.
Rushing to complete your tax return by midnight on the 31st January is much more likely to result in you making errors or omissions on your return. Having mistakes on your tax return could result in penalties which are easily avoided by doing your tax return earlier in the year when you have time to check it thoroughly before you submit it.
Avoid late fines
With so many people hitting the HMRC system in the last few days of January, there’s a much higher chance of the system being unavailable which could result in you being unable to submit your return by the deadline. HMRC imposes a late fine of £100 per submission that isn’t received by 11.59pm on 31st January. Don’t be late; be early.
Deal with queries
By preparing your return early in the year, you will have time to speak to HMRC if you have questions that need answering before you can complete your figures. Getting through to speak to an adviser is often challenging but in January it’s nearly impossible. Save yourself the stress and speak to them in July when everyone else is on holiday.
Have the data you need for life decisions
If you are looking to secure a mortgage, you will need to supply income information to the lender. For business owners, this means your self-assessment tax return information and possibly your Corporation Tax return along with bank statements. You’ll need the latest tax year’s return so this is another good reason to get your numbers in as soon as possible after the tax year end.
Find the right accountant, not just any accountant
Leaving your tax submission to the end of January is stressful if you get halfway through it and then find you need some professional help to sort it out. Most accountants are incredibly busy in December and January, so you might find it challenging to find one who can help you that you also get along with. By tackling this task in April or May, you’ll be able to shop around for the right accountant to support your business.
Get support and do your self-assessment tax return early this year
We love tax returns at any time of the year, but we especially like the ones we can get done between April and October, so if you are ready to avoid the mad rush next January, please contact the team at Adams Accountancy on 01322 250001. Tax returns without the drama are our specialty.
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