Filing your tax return early is a good thing. No, I’ve not suffered a bang to the head. It makes sense in terms of money, time and stress. And here’s why.
1. Know what your tax bill is
Until you’ve filed you return you can’t know for sure how much tax and national insurance you’ll be paying. Filing sooner doesn’t change the bill, but it could give you lots more notice, so you don’t face the double whammy of a nasty surprise and a cashflow-damaging few days to scrape the money together.
2. It doesn’t change your payment date
Ah, I hear you thinking, if I file early I’ll have to pay early. But that’s not the case and the payment deadline stays the same. Now wouldn’t you rather find out what the damage is earlier rather than worrying about it until the last minute?
3. Get your tax refund faster
I put together a post recently exploring the many ways in which you’re probably due a tax refund. But here’s the thing: until your tax return is in, your refund can’t be agreed. So the faster you submit your return, the faster you get money back.
That’s worth filing early whatever your refund is worth, but if you’re in construction, where refunds are an average of £2,500 per year thanks to the CIS scheme, it’s a really big deal.
4. Beat the rush
The tax return deadline for limited companies can be any time of the year, but for sole traders there’s just one date that really matters (assuming you’re filing your return online): 31 January. So guess when accountants are at their busiest?
Even the simplest tax return tends to throw up the odd query or two. And if your tax arrangements are even remotely complex, chances are you’ll have lots of questions. The best time to ask them is well ahead of deadline date, so you can use the answers to your advantage, and so your accountant has all the time required to give you the help you need.
5. Eradicate the errors
Marry in haste, repent at leisure. My nan, always one for a natty proverb, was fond of saying things like that, but the message applies to more than your marital affairs. It’s a good watchword for your tax affairs too.
Cram a year’s worth of accounts into a mad few hours at the end of 31 January and your chances of making a mistake increase dramatically. No one wants a tax investigation, even when you know your accounts are spotless. But a tax investigation into your accounts when you suspect there are errors lurking is especially painful. And when the errors are found, you’ll face penalties.
File early and you give yourself the time to get it right.
6. Make switching accountants simple
It’s not that you can’t switch accountants at any point you wish, but few are likely to entertain you on 30 January when you turn up at their door with a bag of receipts in your hand.
Switching accountants is really easy. File early, and the sooner you’ll be able to make the switch hassle-free.
Discover the big sigh of relief you get to take when you file early. Join The Tax Farm.