With January fast approaching, we appreciate that preparing your self-assessment tax return can be time-consuming and sometimes overwhelming.
According to HMRC, only half of the self-assessment tax returns issued are filed by the end of December, leaving the other half to all be filed before the 31 January deadline at the last minute.
Hiring an accountant can reduce the stress of filing, ensure the return is filed in plenty of time and ensure that there are no errors in your return.
In this blog, we explore some of the benefits of preparing your personal tax return in good time.
1. Avoiding Last-Minute Stress:
By starting early on your tax return preparation, you can avoid the stress and pressure that comes with rushing to meet the deadline. This allows you to have sufficient time to gather all the necessary documents and information needed for accurate reporting. This can include any payroll documents like P60s and P11Ds as well as annual pension or savings statements and any receipts for business expenses if you’re self-employed.
It is important to have a filing system for your documents so that you do not misplace anything important. At Future Cloud, we provide an online portal for our clients so that they can upload any documents as they are received throughout the year. Being organised increases your chances of being in good books with your accountant!
2. Detecting Errors:
You are less likely to make errors if you have enough time to go back through your return and check all the information included is correct. If HMRC determines that you have not taken reasonable care to complete your tax return correctly, they can charge a penalty of up to 30% of the tax owed. The responsibility for the accuracy of the return lies with the taxpayer, even if they decide to use an accountant to help them so it is really important that you give yourself the time to provide the correct information.
3. Prompt Refunds:
If you have paid too much tax in the year, for example, through PAYE, CIS or through payments on account that were too high, then when you submit your tax return, HMRC will start processing a refund. If you are in this situation, filing early will allow you to receive the refund as soon as possible. Processing a tax refund can take anywhere between 5 days and 8 weeks (and in some cases, even longer!) and the closer to the deadline you are, the longer it’s likely to take as HMRC has a lot to process at that time.
4. Planning for Payment:
Some people think that filing early means you have to pay early, but this isn’t the case! If you have tax to pay, it is still due by 31 January and filing early gives you more time to plan, save and budget, reducing the likelihood of overdue payment penalties and potential interest charges.
Late payment penalties start at 5% of the tax outstanding if the payment is 30 days late, so this can add a significant amount to the amount payable, along with interest added too.
If you are unable to pay, it is worth contacting HMRC to arrange a payment plan to avoid further penalties.
If you file your return late, there are also late filing penalties, which start at £100 if the return is up to 3 months late.
5. Obtaining a Mortgage or Loan:
If you are self-employed, you often need to provide an SA302 tax calculation as proof of income and earnings if you wish to obtain a mortgage. If you haven’t filed your most recent return yet, this process can be delayed, and the house of your dreams could pass you by! It’s worth speaking to your accountant in advance if you know you would like to apply for a mortgage so that they can make sure your affairs are up to date and the documentation is ready to go.
6. Future Proofing Yourself and Your Business:
It is always a good idea to be one step ahead when it comes to your finances, so communicating with your accountant can ensure that you are organised and up to date with your affairs. Completing your own tax return can be challenging for many reasons, so hiring an accountant lifts the weight off your shoulders and helps to ease the process.
At Future Cloud, we offer cloud accounting services, meaning the process of filing your tax return can be even more streamlined than you may have imagined. We use the best technology to organise and file your documents. If you help us, we can help you!
Filing early means you can enjoy your Christmas stress-free! If you need any advice or help with your self-assessment tax return, please get in touch with us at email@example.com!