That time of year again comes around very quickly and it feels like HMRC is nipping at your heels! Your tax return is not something you probably think about until you get the 'reminder', but there are advantages to filing early.
The self-assessment deadline for filing is 31 January, so for example, your 2022-23 tax return must be filed by 31 January 2024. Still feels like a long way off? It's worth considering the following benefits to your business of filing early:
1. Forward Planning and Forecasting
The advantage of knowing what you will need to pay in tax is a game changer. It means you can put money aside or set yourself a savings plan so that the big four or five-figure shock is softened. Accurate financial planning is essential for your business. Filing your tax return early does not mean you are duty-bound to pay early; it just means you have better control over your finances and cash flow.
2. Spread the cost
HMRC currently operate a Budget Payment Plan which will enable you to pay in instalments, therefore spreading the cost over a longer period of time. Some people find this an easier option as it ensures peace of mind knowing you have your tax bill covered. Think of it like a safety net!
3. Get a tax refund
It may not happen often but when it does, it puts a smile on every business owner's face! Once you have filed your return you will be able to check whether you are due a refund via the HMRC App, or your Accountant will be able to tell you. Of course, the advantage of filing early means that any refund due is actioned more quickly.
4. Time on your side
Getting together receipts, spreadsheets and any other accompanying paperwork for a tax return can be time-consuming. If doing this early, it leaves time for you or your Accountant to raise any queries or gaps and for the necessary information to be completed. Many Accountants work on a first come first served basis with their clients so being an early bird means your tax return get the attention before others.
5. Avoid late penalties
HMRC doesn't mess around with deadlines. If you miss the filing deadline for any reason, you could be faced with a hefty penalty fine. Sometimes, it can be as much as 100% of your tax bill!
You may very well need the support of an Accountant or, if filing yourself, of HMRC. Both become very busy in the lead-up to the January deadline, causing a headache for you, particularly if waiting in long queues on the HMRC helpline. So give yourself and your business the breathing space it deserves. Get your tax return filed as early as possible. It could save you money and will definitely save you in time and headaches.