If the prospect of completing your annual Self Assessment tax return fills you with dread, causing you to put off the inevitable until it becomes a race to avoid an automatic Late Filing Penalty, you are not alone.
HMRC reported that more than 31,000 taxpayers submitted their 2020 to 2021 tax return between Christmas Eve and Boxing Day and also revealed that no fewer than 2,828 customers filed their Self Assessment tax return on Christmas Day.
In addition to avoiding a last minute rush or giving up time with your family over the festive period, there are other benefits to having your tax return ready to file early, for example:
After you have completed and submitted your Self Assessment tax return, you will know exactly how much tax you are due to pay and when. It is useful to see this figure in advance of the payment falling due as it can allow you to save and plan your finances effectively. You are not required to pay your tax liability when you file your tax return, therefore, filing early, allows you to budget for your tax payment ahead of the payment deadline.
If you are entitled to a repayment of tax, the sooner you file your tax return, the sooner you will receive the repayment due to you.
If you cannot pay your tax bill by the deadline, you can arrange a Time to Pay agreement with HMRC. If you submit your tax return in advance of the deadline, this will give you time to discuss your situation with HMRC.
Rushing to meet the deadline in the final hours is no way to complete such an important task. When you give yourself, or your advisor plenty of time to complete your Self Assessment tax return there is less chance you will make careless mistakes. HMRC imposes fines for careless errors or misleading statements, so it is essential you have enough time to gather everything you need and complete your return meticulously.
You can submit your tax return as soon as you have all of the information available to do so. This will be after the tax year has ended in April. In addition to the tax owed, you may be required to make payments on account. There are exceptions to this, and your advisor will be able to inform you fully of what is due.
As discussed, there are many benefits to submitting your return early, including that you can seek proper advice on wealth management and tax planning. Our experienced tax advisors can help you to manage your tax affairs effectively and take advantage of any wealth management strategies available to you.
Laura Brown is a tax specialist and Director of Murray Beith Murray's Tax group. If this article has raised any questions or you would like to discuss your tax affairs then please complete our contact form or call 0131 225 1200.
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