The Benefits of Early Tax Planning for Self-Assessment
Self-Assessment tax return in UK applies to anyone who is self-employed, company directors, recipients of income from renting out a property or other sources not covered by PAYE, as well as those who receive income from abroad.
The Self-Assessment tax return must be completed annually, and the deadline for submitting the tax return is usually 31st January following the end of the tax year. The tax year runs from 6th April to 5th April the following year.
Many people delay the Self-Assessment tax return in UK form until they are closer to the date of due. There are numerous reasons to complete your tax return sooner could be beneficial to you.
Here are some reasons why you should file your Self-Assessment tax return early and ensure your tax affairs are up to date.
1. Better understanding of your liability
It is crucial to complete your tax return as soon as you can to keep track of tax obligations.
By doing so, you can take advantage of all allowable tax reliefs and avoid last-minute panic, as well as potential interest and penalties from HMRC.
It’s important to note that if you owe anything up to £3000 in tax it is possible to collect the tax via your pension or salary and give you time to plan your budget for the payment. But, submitting your tax return earlier does not have to require you to pay your tax later.
If you are planning to pay your tax immediately or require to create a payment plan making your tax return earlier can ease anxiety and keep you in the good graces of HMRC.
2. Receive any repayments quicker
If you’re in need of an income tax payment, filing your tax return earlier can result in receiving your tax refund quicker and can be beneficial to cash flow during the summer months.
3. Avoid unwelcome surprises next year
It is possible that you will have to make payments through your account in accordance with your prior year’s tax obligation.
The early calculation of your tax obligation can provide you with more precise information and a better understanding of the tax obligations you will face in the near future (so it won’t be a unexpected surprise the following year). You could also have the possibility of reducing your tax payments on account if you have decreased from the previous year.
4. Make more time to plan your taxes
The early filing of your tax return gives you time to look at tax planning strategies and gives you ample time to take action to the next tax year.
5. Use your mortgage or remortgage application
If you’re looking to purchase a home or refinance your current property usually, you’ll need to prove your earnings through the submission of the SA302 as well as an HMRC Tax Year Summary.
These documents will demonstrate the amount of income you’ve disclosed to HMRC and will provide lenders with the necessary information to process your application.
The same applies to other types of finance or benefits, like:
- Universal Credit
- Student Finance
- Vehicle leasing or loans
6. HMRC have just 12 months from the date of submission to start an investigation
HMRC typically has 12 months from when they receive your tax return to begin an investigation if they decide to pursue it. If you file your Self-Assessment earlier, the clock begins to tick earlier.
Tax investigations could be targeted or random If you want to be safe, protect yourself.
7. Get better protection from unknown elements
If you don’t file the tax return until at the very last moment, unidentified circumstances like illnesses, lost information, or even disruptive weather may cause more stress.
Being organized and able to handle your tax issues promptly will save you the added stress of not meeting deadlines as well as HMRC penalties and interest.
8. Take advantage of opportunities that are more diverse
At Account Ease when we have the chance to talk about Self-Assessment tax return in UK with our clients prior to the start of tax year we can have greater, more meaningful conversations about their financial situation, not only tax. Additionally, we can discuss other opportunities they might have.
Engaging in these conversations early will mean you have more time to evaluate any problems and implement any needed solutions in place without running out of time.
How the Account Ease team can help
The tax department at Account Ease file more than 1,700 self-assessment tax return in UK each year, covering a wide variety of income sources and client circumstances. We’re always willing to discuss different ways our team can assist you in completing your tax return.
The Tax Investigation Service also means that for a modest annual fee. We’ll ensure your protection from the need for an HMRC tax inquiry. If you are selected to be the subject of an HMRC investigation. We’ll manage the entire process as well as defend you from HMRC and assisting you in submitting all necessary information while minimizing the impact on your personal and professional life.
If you have any issues you’d wish to share with an employee our team of tax professionals, we encourage you to schedule a no-cost consultation. You can make an appointment by filling out our online inquiry form.