The idea of sorting out your self-assessment tax return may not be at the top of your agenda right now! After all, you have until next January to file it.
But there are lots of benefits in getting your 2020/21 return completed before the summer.
You can submit your tax return as soon as the financial year ends and the new one starts. So you could submit your 2020/21 tax return on 6 April, one day after the previous year finishes.
Many people leave submissions until the deadline of 31 January the following year. But it isn’t a wise move.
In fact, there are lots of reasons to get it in there early. But why would you do this? What are the main benefits?
Here are the main advantages of getting your return done sooner rather than later.
4 reasons to get your self-assessment done now
It makes planning easier
Knowing the cost of your tax bill in advance should help you set aside the money needed to pay the bill. This doesn’t need to be paid until January 31, 2022, so you have lots of time to save and be prepared. It’s better than a sudden bill that needs quickly settling. This makes planning so much easier and means you have time to save, reducing the need to borrow money.
You’re less likely to mess up
HMRC revealed that more than 25,000 people filed their tax return between 11pm and 11.59pm to meet the January 2020 deadline. Leaving it this late is dangerous and increases the likelihood of errors. Even when mistakes are innocent, they can still lead to penalties and possible fines. Take your time, plan ahead and make sure you aren’t rushing around at the last minute.
If you submit your return early, you receive a quicker refund if you’re due one! If you’ve overpaid tax, you’ll get a refund sooner rather than waiting around for several months. HMRC operates a ‘payment on account’ system where you make two payments per year. But if you’re early and you know how much your bill really is it helps your planning process.
More time to research
When dealing with business finance, you can include the costs of hiring a professional accountant or adviser as a tax-deductible expense. It’s important to do correct research and make sure you find the right adviser.
Their advice can help you set up a proper record-keeping system. Plus, their knowledge of tax and expenses could go towards reducing your overall liability.
If you want to know more about self-assessment, then contact us today.