April marks the end of the financial year and the start of a new one. It is the starting point for new yearly budgets, and a time to reflect on our financial profiles. If you missed last month’s blog post on Bookkeeping Myth’s Busted, then perhaps you didn’t realise that you can actually submit your tax return any time after the 6th April right through until 31st January. Below, I will give you some reasons on why you should file your tax return early.  

1. It gives you longer to save up 

Just because you can submit your tax return in April, it does not mean that you have to pay the tax bill straight away. The tax bill will still be due the following January. This gives you 9 months to save up and pay this expense. Or if you do it at any point between April- December, you are still giving yourself a longer chance of saving up rather than doing a last minute submittal in January. 

By calculating your tax liability, you will be able to budget accordingly and manage your cash flow better. If you leave the payment too late, and you end up missing the payment deadline, you will be charged interest and even late penalty fees. For those that submit late, they will be charged an initial automatic £100 penalty. From there on, the fine can keep creeping up the later you end up submitting. 

Think of how less stressful being able to budget over time will be for you and your business. You won’t have to seemingly magic up money. If the bill is more than you had anticipated, it gives you that much needed time to save and pay it off. Your payment will not be due until January 31st

2. December and January are busy months

Think about the months of December and January. For most businesses, these end up being two of the busiest months of the year. In December, everyone is snowed under juggling business, social life and visiting family. Plus you usually have time off over Christmas, meaning that January you hit the ground running. 

If this is usually you over these two months, lessen the load by getting your tax return done and submitted early, rather than having to cram it into an already busy time of the year. 

3. It gives you an overview of you finances 

By having an overview of your finances, you will be able to look ahead to the rest of your year in business and think about things accordingly. Maybe your tax bill was lower than expected? You may have saved up too much money and can now buy something else you may need for the business, whether that’s new equipment, or the ability to undertake more training. 

If you know how much you need to save up for, you know how much you can delegate to other aspects, such as your wage and budgeting business needs. It also helps you to see how your business has done annually, which is an important piece of knowledge to have. 

4. If you would like to use a bookkeeper, it’s best to get booked in early

You can imagine how busy December and January is for a bookkeeper. Here at McCarthy Browne Bookkeeping, we are usually inundated with tax returns around this time of year. It is essential that if you want to use a bookkeeper, that you get booked in earlier rather than later as you may end up disappointed and quite overwhelmed if they have no slots available for you. 

Don’t end up without the help you need, and try and get in touch with a bookkeeper before these months suddenly dawn upon us. I love to be able to give my client’s tax returns the time and attention that they require, that is why I encourage the returns to be submitted throughout the year. 

5. Benefits with your tax code

If you submit your return before the 30th December, you then have the chance to use your tax code to collect tax liability. This eases cash flow and is great for pensioners and employees. 

6. Tax refunds are processed quicker

If you file your return early, any tax refund owed to you will also be accelerated. This money can then be in your bank and gaining interest throughout the year. 

It often takes longer for refunds to be issues when tax returns are submitted in January, this is due to the high demand of the HMRC services and the system ends up being overwhelmed. 

7. The implications on Tax Credits

If you are in receipt of tax credits, the renewal is 31st July annually. So, although you can put in estimates and update them at a later date, imagine how much easier it would be if you were able to give the Tax Credit Office your actual up to date figures. 

This would save the headache of either getting over payments, or getting too little. 

8. No need to rush

By submitting your tax return in early, you are allowing yourself the time to calmly collect what you need to submit it. When you do it this way, you avoid making quick mistakes from rushing. 

You may find life has changed in the last year, by filing early; you are able to think ahead of tax planning opportunities. You also have the time to gather everything you need, such as bank statements without the stress of rushing. 

I hope that this blog has given you some great insight into why submitting your tax return early can really give you some advantages in the financial year. If you would like to discuss these benefits further, then get in touch today with McCarthy Browne Bookkeeping.