By now HMRC will have sent you a reminder to file your 2014-2015 tax return. Since you have until 31st January 2016 to file your return, it is all too easy to put it off until later in the year. After all you’re busy running your business and filing your tax return is not a priority.
At The Financial Management Centre we are aware of several benefits of filing your tax return early.
#1. Get your tax refund early
HMRC does not wait until deadline day to pay out what’s owed to you. If you believe you’ve overpaid tax and are due a refund it makes sense to get your return in as soon as possible so it is processed a bit quicker during HMRC’s quieter period and you get your refund paid as soon as possible.
#2. Prepare and manage your cash flow
Early submission means you know what you are due to pay and the sooner you do the more time you have time to save the money for 31st January. Just because you get your return in early doesn’t mean you have to pay your tax bill any earlier. You might even be able to have any tax due collected through your tax code.
#3. More time to prepare means less errors
If you wait and then have to rush your return in December/January, you’re much more likely to make errors. This could mean you pay too much tax but it could also mean you pay too little tax and risk having to pay fines and interest on unpaid tax. In addition, the longer you leave it the greater the chance of misplacing paperwork and forgetting what happened more than 18 months ago which then makes a stressful situation even worse.
#4. Avoid paying higher accountancy fees
Many accountants often charge a premium to deal with records they receive close to deadline day and some offer reduced rates if they get tax return work early. Despite the obvious benefits of submitting your return early many people wait until the last minute and end up paying higher fees.
#5. Tax credits
If you receive Tax Credits or benefits you have to renew your claim each year by 31st July. Whilst you can use estimated figures it is preferable to use actual figures in order to avoid over or under payments which can cause problems and be inconvenient later on in the year.
Remember a £100 automatic fine is charged for late returns even if there is no tax due and the penalties go up from there. To minimise the risk of being caught out our best advice is to get your return submitted as soon as possible. At The Financial Management Centre we might be able to save you some tax and certainly will be able to save you the stress and let you focus on your business.