Procrastination is the downfall of most working professionals. If you decide to leave anything until the last minute, you’re guaranteed to make mistakes or miss your deadlines altogether.
This especially applies to your annual tax returns. While it’s understandable that you may not be rushing to spend an evening poring over your books and making sure all of the numbers add up, there are many benefits to sorting your tax returns early.
This year, more than 630,000 people filed their tax returns on the deadline day of 31 January, with the peak hour being between 4pm-5pm. By doing this, you’re creating a stressful situation that can easily be avoided.
Starting your tax return earlier in the year will allow you to plan for your next accounting period. The sooner you complete your tax return, the sooner you’ll get your tax bill, letting you know exactly how much you need to save each month. If you know how much to save, you know how much is left to reinvest or keep for yourself.
It could be a case of finding out you don’t have enough money to meet your tax obligations. In this case, you’ve given yourself the extra time to secure funding and make sure you can pay HMRC what it’s owed.
Avoid late payment fees
If you miss the deadline due to the late filing of your tax return, HMRC will issue you a fine of £100. If you still haven’t paid, HMRC will add interest on top of your penalty until you reach a cap of £1,000. Additional fines are added if you’re more than six to twelve months late.
Taxes can be expensive at the best of times, but by letting your returns fall by the wayside, you’re making it more expensive.
Knowing you’re late for something will make you feel uneasy, making you scramble around trying to make up for the lost time.
Suppose you’re proactive and commit some of your daily routine to organising your tax return ahead of the deadline. In that case, you won’t need to spend the evening desperately collating all your expenses to ensure HMRC has your information on time.
Being tax efficient
The days leading up to the deadline are busy for HMRC due to the amount of processing involved. By submitting your tax return early, you’ll more likely know if you’re entitled to a tax refund, as your return will be processed much quicker than if you waited. The sooner you get your refund, the better.
The same applies to any tax reliefs you’re eligible for. With careful tax planning, you can make the most of the tax breaks available.
Whether that’s capital gains tax relief or even claiming for R&D work carried out over the year, having the time to look into these will only serve as a benefit.
Failing to plan is planning to fail, or so the team at Langdowns DFK believe. If you want to look into early tax planning, then a team member can offer you the supportive advice you deserve.