Your self-assessment tax return is an inevitable and vital part of your financial year.
The registration deadline falls on 5 October, followed by the payment deadline of 31 January 2023.
So, instead of waiting until the last minute to start preparing your accounts, you can benefit from starting the process earlier.
Here are five reasons why you should get ahead on your self-assessment.
Claim a tax refund early
As it gets closer to the deadline, HMRC’s officers will become increasingly more busy, meaning it will take longer to process your self-assessment tax return and any refunds HMRC may owe you.
So, by preparing your self-assessment early, you’ll be able to apply for your refund and receive it much more quickly than if you wait until the last minute.
Although you will receive your refund earlier than usual, the payment date for your outstanding tax bill will stay the same.
If you leave your tax return until the last minute, you will likely rush through the filing process and make mistakes. Even the smallest of errors can lead to you losing out on any allowances you may be eligible for or even result in HMRC issuing you penalties.
By getting an early start on your self-assessment, you’ll be able to take your time and carefully enter all of your information accurately.
If someone misses the payment deadline on 31 January, HMRC will issue them a fine. Failing to file your self-assessment will automatically incur a £100 fine. After 30 days, you’ll be charged 5% of the outstanding tax amount.
If HMRC doesn’t receive your self-assessment for three months, you will be charged £10 a day for a maximum of 90 days.
The longer you leave it to file your tax return, the larger the penalties. That’s why you should get everything done as soon as possible, not only to save money but also to save stress.
Manage your cashflow
Getting your self-assessment done early can help you plan for the year ahead.
Because you will know exactly how much tax you will pay, you will be able to calculate your remaining funds and look into reinvesting them in your business or your personal life. As you will be able to allocate money to pay your tax bill, you will save yourself the worry of trying to find a greater sum to pay it off when the time comes.
You will also have plenty of time to look into your annual allowances. For example, if you have sold property or higher-value assets over the year, you’ll be able to make the most of your capital gains allowance.
Reclaim some personal time
As the deadlines for your self-assessment are around the end of the year, the last thing you want is to concern yourself with your tax returns over Christmas, when you could be spending time with your family or friends.
You’ll save even more time by asking your accountant to take over the filing of your self-assessment for you.
The team at Ventham’s has helped countless clients fill out their tax returns and can help you too.
Get in touch with our team.