As we start approaching the end of the year, we’re also getting closer to the deadline to file your tax return. Each year, a surprising number of people leave this to the last minute. According to HMRC’s statistics from 2018, over 750,000 people filed their taxes on the final day with the department receiving over 1,000 submissions a minute during peak time. More worryingly, however, nearly the same amount of people forgot to file their taxes on time altogether. But filing your tax return early could benefit you and your business.
What are the self-assessment tax deadlines?
First, it’s important to know what tax deadlines you need to adhere to. In 2019, the deadlines to file your tax return for tax year 2018/2019 are:
- Midnight 31 October 2019 for paper tax returns
- Midnight 31 January 2020 for online tax returns
Note that the deadline for registering to pay tax is on 5 October 2019. Since the previous tax year ended on 5 April 2019, you have plenty of time to sort your taxes before the deadline.
So, why should you look to file your tax return early? Here are five reasons why you should file your tax returns on time:
1. You avoid paying penalties
The most obvious reason for doing your taxes on time is the cost of late filing. Failing to file your taxes on time can end up being expensive. Currently, if you miss the deadline to file your tax return, you could have to pay:
- A £100 instant fine
- £10-per-day fines if you don’t file by the next 90 days
- £300 or 5% of the tax you owe (whichever is greater) if you haven’t filed after another 90 days
- Additional penalties if you fail to pay even after this.
The longer you fail to file, the more it’s going to cost.
2. You don’t have to rush it
Filing your tax return early gives you a lot more breathing room in terms of getting it done. Anyone who’s ever filed tax returns knows the process involves all sorts of paperwork. You have to look at your bank statements, get the right receipts sorted and so on. Gathering all this evidence takes time and the sooner you start with it, the better.
When you file early, you don’t have to rush to get all the paperwork done in the final week. Instead, you could do a bit of it one week and finish it off the next – you could even divide it into smaller, manageable tasks. For example, find the receipts on one day and go through bank statements the other. This way, you don’t feel overwhelmed by what needs doing but you can have a stress-free flow to sorting out your taxes.
3. You reduce the risk of errors and problems
Because you’ll end up having more time to finish the paperwork, you reduce the risk of making a mistake. You’ll have more time to double-check everything. We all know that rushing to get over the finish line is not a good strategy for optimal results. By leaving enough time to sort it out, you guarantee meticulous results. Reducing the risk of errors can make sure you don’t end up paying too much and you can avoid having to fix any issues with HMRC afterwards.
Since you have more time on your hands, you are also better equipped to solve any issues you might have. HMRC’s phone lines get super busy during January, as everyone is trying to get the advice they need. But if you need help and you’re filing your taxes early, you can talk to them when they’re less busy. Even your accountant is going to love working with you if you don’t shower them with problems during the busiest time of the year.
4. You can budget your money better
When you file your tax return early, you can budget your money better and this can have a positive impact on your cash flow. You will be able to know how much tax you owe and with ample time to make the payment. You don’t even have to pay immediately – filing early doesn’t mean paying at the same time. You can simply ensure you save enough to make the payment near the deadline.
HMRC doesn’t always just take either! You might have paid too much last year and may be entitled to a tax refund. The earlier you file your tax return the sooner they can process your refund. Having a bit of extra money coming your way can be a big benefit.
5. You can enjoy the holidays
The deadline for filing your tax return comes right after the holidays. Because the whole process can be time-consuming and stressful, a lot of small businesses and self-employed people report feeling anxious about the process. This can lead to a stressful Christmas with you simply sitting at the dinner table worrying about your tax return while others are enjoying their Christmas pudding. If you file early, you don’t have to spend the holidays searching for receipts or waste your start of the new year with late-night tax sessions but can enjoy the party like everyone else.
Where to find help for filing your tax return?
Filing your tax return can be a complicated thing but luckily, there’s help available for you. HMRC provides many useful guides for small businesses and sole traders to get through the tax jungle intact. But it’s also beneficial to consult an accountant or a tax advisor to ensure you make the most of things like tax allowances and benefits.
We here at Devonshire Green work to help small businesses and sole traders. Contact us today and let’s talk about how we can help you file your tax return early and enjoy the benefits!