Self-Assessment Tax Return – the words alone are enough to elicit an inward groan! Many of us procrastinate with our tax return: 1.8 million missed the deadline in January 2021!
We’ll be the first to admit that it’s not the easiest of jobs, but it can be made so much easier if you do it early. Here are some of the reasons to get it done early and breathe a sigh of relief.
1) Avoid tax penalties
We’re in the business of trying to protect your money and we don’t want to see you pay more than you need to. If you miss the deadline, there is an automatic fine of £100. Then there are other penalties, details of which can be found here: https://www.gov.uk/self-assessment-tax-returns/penalties.
There was some leeway last year due to the Covid-19 crisis but we don’t think these will be repeated for the 2020/2021 tax year.
2) More time to budget your tax payments.
Even if you file your self-assessment early, you don’t have to pay your tax any earlier. The payment dates remain January and July. So, it can give you longer to plan and budget for your tax, especially as you will know earlier what your tax liabilities are.
3) You might be eligible for a tax refund.
If you have overpaid any tax, you can get your hands on your tax refund sooner. Or you might be able to reduce your second payment due on 31st July. Or if you have made a claim for loss relief, this might come to fruition. Money coming back from HMRC is always welcome!
4) More time to sort your documents.
You will need various documents to complete your self-assessment, including possibly your P60, P45, P11D and all the relevant bank statements. It’s usually easier to do this when they come in, rather than filing them and then trying to find them again come January! If your accountant does your tax return for you, then it gives them time to make sure that you have all the documents and to let you know what you need. Another related advantage is that you will have your tax return all done to help with any mortgage applications or claims for income support.
5) Avoid the January panic!
You will get a gold star from your accountant if you let them have your documents in good time and long before January. This is their busiest time, and they will be grateful to spread the workload. You will find it easier to get hold of them to answer your queries too.
If you file the self-assessment yourself, then you will avoid the HMRC’s busiest time. Their helpline is usually overwhelmed at this time, with long call waiting times. Save yourself some time and make a note to do your self-assessment well before then.
6) Time to sort out the registration process.
If you are new to filing a self-assessment, then registering on the HMRC system can take time. Best to sort this out early because obtaining your Unique Taxpayer’s Reference (you’ll need this to set up a HMRC account) is done by post.
7) Your Christmas will be wonderful!
Perhaps we have over promised on that one! But it does mean that you won’t have the January dread of filing your tax return hanging over you over the festive period.
Have we persuaded you yet? Speak to us about your self-assessment if you have a specific query and please let us have your documents early if you want to beat the rush.