You have until 31 Jan to complete your Self-Assessment Tax Return, so why would you want to do it now??
Most small business owners are incredibly busy and there will always seem to be something more pressing to do, however, there are some very good reasons why, as a small business owner, you might want to consider making the time to complete that much-dreaded Self-Assessment Tax return early. Take a few moments to consider the benefits we’ve listed below.
Feel more festive and rather “smug” this Christmas rather than the usual sense of dread – Getting a better work-life balance seems to be at the top of most of our agendas these days, and it certainly appears on many a list of New Year’s resolutions. So, this year, save yourself the thought of the looming tax return that haunts you every year as you eat your Christmas dinner or raise your glass to see in the New Year, get it done early and experience the festive season and the month of January “looming tax return” free! With your tax return out of the way, you can put “Better work-life balance” on your list of New Year’s resolutions and at least have given yourself half a chance of achieving it!
The possibility of aiding cash flow by reducing your July Payment on Account (POA) – You may be able to reduce your July payment on account (POA), or even eliminate it, if you have earned less than the previous year or you have more tax deducted at source.
What does this mean?
Payment on Account is a tax payment made twice a year by the self-employed (when your annual tax bill is over £1,000) as a way of spreading your tax bill out over the year. The POA figure is derived from the previous year’s tax bill and is payable in two instalments; January 31st and July 31st each year. Each instalment will be normally 50% of the previous year’s tax bill. However, if you complete your self-assessment tax return before the July POA is due, and it shows that you earned less than the previous year, or more tax has been deducted at source, your July POA could be reduced or even eliminated.
The option to take early receipt of any tax refunds due – If you’re due a tax refund, you can have it paid to you now rather than waiting until after the Self-Assessment Tax Return deadline, ensuring that you benefit from any interest that could be earned on it rather than HMRC.
Better tax planning to aid cash flow – Early completion of your tax return lets you know in advance what your tax bill is going to be, allowing you to set money aside for it rather than having to find it all at once. Going forward, you can then get into good habits and start saving monthly for the current year.
Accessing Internet banking records – On the basis that many internet banking services only display transaction history for 12 or 18 months, waiting until January before completing your self-assessment tax return could mean that some of the bank records you might need access to are no longer available online. By filing your tax return early, you can avoid trawling back through your paper bank statements or having to visit your bank branch to request historical records if you don’t have paper statements. Make your life easier and get it done early when all the relevant transaction history will be available at the click of a button!
Take your time and avoid mistakes – Rushing your tax return at the eleventh hour can leave you scrabbling around to find the information you need and increases the likelihood of mistakes. Also, if there have been any changes to your tax circumstances in the last year, you may need some time to seek advice and consider any tax planning opportunities. Preparing your tax return early will give you the time you need to do it all correctly and effectively.
Ability to provide HMRC with accurate information for the tax credit renewals deadline – The deadline for tax credit renewals is 31 July 2017 and is likely to affect anyone claiming working tax credit (WTC) or child tax credit (CTC). This renewal process gives HMRC the information that they require to finalise last year’s tax credit awards and renew claims for the current tax year (2017/18). If you wait until January to complete your Self- Assessment Tax Return, you will need to provide estimated final income figures for the previous year in order that HMRC can renew your claim. Even if you do not intend to renew your claim, you will still need to provide the figures so that HMRC has up to date information with which to finalise last year’s awards. By completing your tax return before the end of July, you can give accurate income figures rather than estimates for tax credit purposes and avoid the hassle of possible tax credit repayment in the future.
An opportunity to be kind to your accountant! – Any hope of a work-life balance goes out of the window for your accountant in December and January because this is an incredibly busy time of year for them. Be kind to your accountant and get your tax return in early to help them to spread the workload out.
We hope you have found this article interesting and informative. If you have any questions or would like to further discuss the benefits of filing your Self-Assessment Tax Return early, please call Trinity on 02475 185286 for a Free Consultation or complete our online form.