Benefits of filing your tax return early
Self-assessment tax returns are not due until 31 January 2018 but there are plenty of reasons to file early, whether or not you are due a repayment. Establishing your tax liability early not only removes the January rush to dig out paperwork, it also helps you manage cashflow, reduces errors and assists current year tax planning. Regardless of when you file your tax return, the deadline for paying any additional tax is the normal due date of 31 January 2018.
Tax repayments
If you are due a tax refund then this should be repaid within 5 weeks of the submission of the return. If you are a building sub-contractor operating under the Construction Industry Scheme, then you may be in a tax refund position.
Employees/Directors/Pensioners
If you pay tax through PAYE there could be an error in your PAYE tax code. For example adjustments required for a loss of personal allowance for earnings over £100,000, high income child benefit charge for earnings over £50,000 or benefits in kind from a previous job. If you submit before 30 December 2017 and owe less than £3,000 then any additional tax can be collected through your tax code. If you make additional payments on account through self-assessment, then the July payment on account can be adjusted using the actual figures.
Self-employed
If your income is fluctuating from year-to-year, then there may be cashflow benefits of submitting early. Your payments on account due in January and July are based on the prior year tax bill, so if you submit actual figures you can then revise your July payment on account.
Tax credits
The applications are due by 31 July and, while estimated figures can be used, avoid repaying any benefit by submitting actual figures.
Mortgage
If you apply for a mortgage your lender may require proof of income from HM Revenue & Customs or your accountant based on taxable income from the most recent tax return.
Interest/penalties
Late tax returns are subject to a £100 filing penalty regardless of any tax liability, then £10 daily penalties start to accumulate after three months with additional penalties due after six months and twelve months. Interest is also due on tax paid late.
Reduce errors
If you retain your bank statements, P60, P11D, dividend vouchers etc., then completing your tax return is less onerous and expensive errors and last minute panics are less likely to occur.
Tax planning
There have been a number of changes to income tax including the savings tax allowance, dividend tax allowance and increased tax rates on dividends. Filing early assists future tax planning, especially for those with savings or investment income or owner-managed businesses.
Self-assessment tax returns are not due until 31 January 2018 but there are plenty of reasons to file early, whether or not you are due a repayment. Establishing your tax liability early not only removes the January rush to dig out paperwork, it also helps you manage cashflow, reduces errors and assists current year tax planning. Regardless of when you file your tax return, the deadline for paying any additional tax is the normal due date of 31 January 2018.
Tax repayments
If you are due a tax refund then this should be repaid within 5 weeks of the submission of the return. If you are a building sub-contractor operating under the Construction Industry Scheme, then you may be in a tax refund position.
Employees/Directors/Pensioners
If you pay tax through PAYE there could be an error in your PAYE tax code. For example adjustments required for a loss of personal allowance for earnings over £100,000, high income child benefit charge for earnings over £50,000 or benefits in kind from a previous job. If you submit before 30 December 2017 and owe less than £3,000 then any additional tax can be collected through your tax code. If you make additional payments on account through self-assessment, then the July payment on account can be adjusted using the actual figures.
Self-employed
If your income is fluctuating from year-to-year, then there may be cashflow benefits of submitting early. Your payments on account due in January and July are based on the prior year tax bill, so if you submit actual figures you can then revise your July payment on account.
Tax credits
The applications are due by 31 July and, while estimated figures can be used, avoid repaying any benefit by submitting actual figures.
Mortgage
If you apply for a mortgage your lender may require proof of income from HM Revenue & Customs or your accountant based on taxable income from the most recent tax return.
Interest/penalties
Late tax returns are subject to a £100 filing penalty regardless of any tax liability, then £10 daily penalties start to accumulate after three months with additional penalties due after six months and twelve months. Interest is also due on tax paid late.
Reduce errors
If you retain your bank statements, P60, P11D, dividend vouchers etc., then completing your tax return is less onerous and expensive errors and last minute panics are less likely to occur.
Tax planning
There have been a number of changes to income tax including the savings tax allowance, dividend tax allowance and increased tax rates on dividends. Filing early assists future tax planning, especially for those with savings or investment income or owner-managed businesses.
