Michael Lansdell shares that there are more advantages to filing your tax return early beyond being organised.
HMRC is telling people about the advantages of filing their self-assessment tax return early, by July 31 – it’s likely that you’ll have had emails or other reminders. The carrot being used is that this will enable you to reduce your tax bill. But how much could you really save and are there other advantages?
The deadlines for filing self-assessment returns are October 31 (paper), January 31 (online).
File in advance and you can reduce self-assessment payments on account for 2020/21; the second must be paid by July 31, so if your tax liability for this tax year is less than it was for 2019/20, you’ll be able to reduce the payment. Of course, you can estimate it without filing, but underestimate and you will have to pay the interest on any shortfall. File before the end of July and HMRC will revise the 2021 payments on account to reflect your liability, not the estimated figure.
Did you receive any Coronavirus support? They’re taxable, so report them now
If you applied for any grants under the Self-Employment Income Support Scheme (SEISS), the first three are taxable for 2020/21. Report them correctly now, so there are no delays with HMRC processing them. This applies to all other grants/Coronavirus support – review the amounts to ensure accuracy.
Some certainty about future bills
If you know what your tax payments will be on January 31 and July 31 2020, this is great for planning. If you’re worried about meeting future payments, you can start the conversation with HMRC now, rather than give yourself the stress at the end of the year – and who knows what the next six months or so will bring. If your profits have been squeezed of late, still file early even if you don’t get it done by July 31 – because any overpaid tax will be refunded sooner rather than later.
Claim tax relief or losses earlier?
There are new rules which might give you an opportunity to claim tax relief for losses, but check with your accountant first.
Filing early can help with future planning, and there may be some money-saving benefits – useful if your profits or income have been dented. All in all, it’s good for peace of mind – which is never a bad thing. If you need assistance and guidance with tax planning, give the experts at Figurit a call and we’ll help you set the best course of action.
For more information call Figurit (formerly known as Lansdell & Rose) on 020 7376 933.