No one particularly loves the tax season and if you are one of those people who leave completing your self-assessment tax return until the last minute, perhaps it’s time to plan ahead this year!
Over the next couple of months, many business owners will be receiving their self-assessments through the letterbox. Whether you are a sole trader, freelancer or small business owner, this will apply to you and cannot be ignored.
It can be tempting to put it to one side and let it sit for months on end – or you can get it completed straight away and not need to worry later on in the year.
Which one sounds like you?
Most business owners are busy and tasks are prioritised as they come in and the pressures of business life can seem more important than completing a tax return. The deadline is not until 31st January, so there is no hurry, right?
Here are seven reasons to complete self-assessments early:
Enjoy a peaceful Christmas!
This is the most common reason to want to get self-assessments completed before the deadline date. We want to be able to enjoy Christmas – it’s the time for joy and festivities, time to be with family and friends – not glued to the computer, trying to work out taxes!
It makes sense that trying to get ready for Christmas at the same to as with working on your self-assessment is not a good idea. One of them will over-rule your time, get it done early so you can enjoy the festivities.
Rushing causes mistakes
As with anything, if you’re trying to get something done at the last minute, you’re opening yourself up to mistakes. Mistakes can cost money, if you make a mistake in your tax return, you may end up paying a fine from HMRC which is not something anyone invites as we enter a new year. Preparation and being productive with the way you work when it comes to your self-assessment, at a pace that suits you, will give you an opportunity to make it work properly without mistakes.
Give yourself time
Don’t forget that the deadline of 31st January is the cut off for not only filling out the forms, but for paying any tax owed. If you decide to leave completing the assessment until deadline day, you may be in for a big surprise with how much tax money you need to suddenly find. If you can prepare early, you can give yourself time to collate the money needed to pay the tax bill by the end of January.
Claim your tax refund
The same as needing to find the money to pay your tax bill, you could discover that you’re due a tax refund! The earlier you fill your tax return, the earlier you can claim your tax refund as HMRC are not dealing with as many returns at the same time.
It makes sense that the longer you leave your self-assessments, the bigger chance there is of losing or mislaying receipts, plus there will be more receipts to sift and look through. You’ll need receipts to complete tax returns correctly and to work out expenses and spending. Make it easier for yourself – collate and keep bookkeeping up to date which can be used to directly complete your returns.
Penalties are immediate for anyone who fails to meet the deadline date. Starting off at £100 for filing within 3 months after the deadline and increasing for anything after that time. You can avoid these penalties from the outset by completing on time.
Please your accountant!
January is an extremely busy time for accountants, with a large number of people leaving their assessments to the last minute. Accountants helping business owners complete their returns in January often increase their fees at this time to accommodate the rush. However, accountants welcome business owners throughout the year who want to get ahead of the rush and be prepared.
If you’d like any advice when it comes to your completing a self-assessment tax return – we’d be happy to help.