The little known benefits of filing your tax return early

Know your position

What some people tend to forget is the deadline for filing your tax return is also the same deadline for payment.

Filing your tax return earlier will mean that you are aware of the amount of any balancing payment and any payment on account due on January 31st, 2021. Therefore, you can plan cash flow and ensure Christmas spending doesn’t leave you short come deadline day.

Use your PAYE code

If your balancing tax liability is less than £3,000 and you pay the majority of your taxes via PAYE, you can elect to have the underpayment collected through your PAYE code in a later year. This will also ensure you do not need to make payments on account, again helping cash flow. 

Avoid unwanted attention

It is a well-known fact that tax returns prepared at the last minute are often prepared in haste and more likely to contain errors. Despite what some may believe, it is the taxpayer who is liable for errors in tax returns, not their accountant. If a penalty is issued for errors, the taxpayer will be the one to pay it.

*Interest is charged on both unpaid tax and unpaid penalties

Advantages of submitting your return sooner rather than later:

–      If you are due a rebate you will receive this within a few weeks – why let the revenue hold onto your money.

–      If you owe tax – you will NOT have to pay it any earlier if you submit your return early. Tax is still due on 31st January and you will have the advantage of knowing your tax liability to plan ahead.

–      If you have to pay an amount on account file before July and you can have your 2nd payment changed so you only pay for what you owe and NO more.

–      If you are PAYE your outstanding tax liability can be included in your code if you file before 31st October – giving you a whole year to pay your tax bill!

Avoid unwanted attention

It is a well-known fact that tax returns prepared at the last minute are often prepared in haste and more likely to contain errors. Despite what some may believe, it is the taxpayer who is liable for errors in tax returns, not their accountant. If a penalty is issued for errors, the taxpayer will be the one to pay it.

*Interest is charged on both unpaid tax and unpaid penalties

Furthermore, it is these last minute tax returns which may come under extra scrutiny from HM Revenue & Customs.

Advantages of submitting your return sooner rather than later:

–      If you are due a rebate you will receive this within a few weeks – why let the revenue hold onto your money.

–      If you owe tax – you will NOT have to pay it any earlier if you submit your return early. Tax is still due on 31st January and you will have the advantage of knowing your tax liability to plan ahead.

–      If you have to pay an amount on account file before July and you can have your 2nd payment changed so you only pay for what you owe and NO more.

–      If you are PAYE your outstanding tax liability can be included in your code if you file before 31st October – giving you a whole year to pay your tax bill!

–      Avoid unwanted attention, tax returns prepared at the last minute are often prepared in haste and more likely to contain errors.  It is the taxpayer and not their accountant who is liable for errors in the tax returns.  Errors can be subject to penalties payable by the tax payer and can also incur interest along with any unpaid tax.  Furthermore, last minute tax returns can come under extra srutiny from HMRC.

Avoid unwanted attention

It is a well known fact that tax returns prepared at the last minute are often prepared in haste and more likely to contain errors. Despite what some may believe, it is the taxpayer who is liable for errors in tax returns, not their accountant. If a penalty is issued for errors, the taxpayer will be the one to pay it.

*Interest is charged on both unpaid tax and unpaid penalties

Furthermore, it is these last minute tax returns which may come under extra scrutiny from HM Revenue & Customs.

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