Each year HMRC send millions of people a notice to complete a tax return soon after the end of the tax year to remind them that they have until 31 January to file their Self-Assessment Tax Return (SATR). Despite these annual reminders and the obvious advantages of filing your SATR early many people wait until the end of the year and in some cases the start of the new year before doing anything about it. Amazingly around 5% of returns are filed in the last 24 hours!
Here are TFMC’s top reasons why you should file your SATR as soon as you can:
1) Claim your tax refund early
You don’t have to wait until deadline day to claim back tax that is owed to you. Its well worth submitting your return early if you’ve overpaid your tax – getting in early means you will tend to receive your refund much quicker than normal as HMRC are not dealing with as many returns at that time.
2) Prepare and manage your cash flow
It goes without saying that early submission means you know where you stand at the earliest opportunity. This ensures there is sufficient time to organise your cash flow and allocate funds to cover your tax bill without any nasty surprises. What many don’t realise is that submitting your tax return early does not mean you have to pay your tax bill early. If your return is filed before 31 December you may be able to opt to have unpaid tax collected through your tax code and the PAYE system
3) Allow for thorough preparation
Rushed tax returns spell trouble. Waiting until the deadline approaches is a sure-fire way to make errors and include inaccuracies in your tax return. Not only can this lead to you paying too much tax, it can also leave you vulnerable to fines and interest on unpaid tax if you don’t pay enough. This effective approach also reduces the risk of misplacing vital documents or forgetting important information, helping the whole process run as smoothly as possible.
4) Avoid penalties
Late returns immediately trigger a £100 penalty provided they are filed within 3 months. If more than 3 months late the penalty quickly ramp up and become very costly. Additional penalties apply for late payment of tax initially interest but with additional surcharges if it remains unpaid.
5) Avoid higher accountancy fees
It’s not uncommon for accountants to charge premium rates when deadline day looms. They may however offer reduced rates at quieter times of the year. Take advantage of this and don’t fall into the trap of procrastinating and paying more than you need to.
6) Tax Credits
If you receive Tax Credits or benefits you have to renew your claim each year by 31st July. Although you can use estimated figures to complete this process, it’s far more beneficial to use accurate figures in order to avoid complications later in the year.
7) Contacting HMRC
Have you ever tried to contact HMRC in December and January? Chances are you have spent a long time on hold before you even speak to someone! Whilst many people complain at how long it takes to get through to HMRC you have a much better chance of it being quicker during the spring and summer months.
At The Financial Management Centre we recommend dealing with your self-assessment tax returns as early as possible as it is likely to save you time and stress.