We know, it feels like the tax year has only just ended, and it’d be nice to chill out for a while before you start worrying about tax again. But hear us out: there are some compelling reasons to get your tax return sorted out early.
The deadline for Self Assessment tax returns for the tax year 2021 – 2022 is midnight, 31st January 2023. Sure, that seems like aaaages away. But the payment deadline for that tax year? It’s the same: midnight, 31st January 2023. That doesn’t give you much time for tax planning…
Which takes us nicely to the first advantage of an early tax return:
Time to Plan Ahead
As they say, forewarned is forearmed! The sooner you complete your Self Assessment, the sooner you’ll get your tax bill. This means you’ll know exactly how much you need to pay, and can budget accordingly. It will help you to determine how much new business you’ll need to bring in to cover last year’s tax bill, and any payments on account that will be due.
No Penalties or Interest Payments
In 2020, some 700,000 taxpayers left it to the very last day – with a nail-biting 26,562 taxpayers leaving it to the last hour! Every year HMRC rakes in millions in fines from those filing late and having to pay penalties and interest.
Anyone who is required to file a return but misses the deadline receives an automatic £100 penalty from HMRC.
The penalty is imposed regardless of whether you owe tax or not. If you fail to file within three months – that is, by the end of April – HMRC can then impose an additional £10 daily penalty for the next 90 days, increasing the total penalty by £900 to £1,000.
But the penalties don’t end at the 90-day mark. Past that, you might face:
- A £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed after another 90 days
- Another £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year
- Additional penalties – including up to 100% of owed tax – if HMRC believes you are intentionally delaying your filing.
Don’t leave your Self Assessment to the last minute – it could end up being very expensive.
HMRC’s call centres are notoriously busy
HMRC can be tricky to get hold of at the best of times, but in December or January?! Let’s just say you’d become very familiar with their hold music.
According to HMRC’s own data, released in January 2021, the average waiting time for callers had risen to almost 14 minutes, and 49.2% of callers had to wait for more than 10 minutes to be answered in January 2021. Almost 400,000 callers, around 1 in 5, didn’t manage to get through at all, abandoning their attempts whilst waiting in the 3-month period from September to November 2020.
The more time you spend on hold with HMRC, the less time you have for the actual running of your business.
You could get a quicker tax refund
If HMRC owes you a refund, it will be processed as soon as you file your return. And since HMRC isn’t as busy now as it will be nearer deadline day, it could be speedier to process your refund. This can be particularly helpful if you’re facing a cashflow shortfall.
So there we have it: some very good reasons to get your Self Assessment tax return sorted ASAP.
At Broadwing, our clients come from a wide range of businesses including media & entertainment, influencers, and tech startups. We specialise in outsourced accounting for small to medium-sized businesses, personal & corporate taxes, business systems and solutions.
To learn more about the advantages of early Self Assessment filing, get in touch with us.
Tel: 01604 328328
Email: [email protected]
