Each year I tend to leave my tax return until the last minute. Is there any benefit to me for doing it sooner?
In the words of Charles Dickens: ‘Never do tomorrow what you can do today. Procrastination is the thief of time.’ And never a truer word can be said than about tax returns. Staying ahead of the game, tax-wise, and doing your tax return early is all about understanding what your tax liability is, so you’ve got time to manage the tax that you need to pay.
If you do your tax return early you may be able to reduce your payments on account for next year, meaning you’re paying less.
Also, if your tax circumstances have changed in the last year, for example if you have losses or an additional hike to your income, preparing your return early gives you time to seek accounting advice and consider any tax planning opportunities.
If you owe less than £3,000 in tax and you submit your online tax return by 30 December 2019, you can opt to have your tax liability collected through your tax code.
Depending on how much your tax liability is – which you will only know when you’ve done the return – you may need to encash some investments to reduce the amount.
And remember, it doesn’t matter how early you do your return, you don’t have to pay HMRC until the normal due dates of 31 January 2020 (balance and the first payment on account, if applicable) and 31 July 2020 (second payment on account, if applicable).
Another benefit is that tax refunds are accelerated. Once your return is filed, any refund should be processed soon after.
And, finally, there’s the smug factor. Filing early will mean you can avoid the mid-January panic felt by many, and enjoy a well-earned, stress-free rest over the holiday period.
If you need any help with your tax return or overall tax affairs, please get in touch.
Want to know more? Call us on 01432 273189 or email firstname.lastname@example.org