HMRC recently reported that 300 tax returns were filed in the first week of the tax year. So why would you want to file your tax return early? The deadline for online 2023/24 tax returns is not until 31st January 2025 but there are many reasons why you would want to file a return much sooner.
Peace of mind
Probably gathering your tax return information is not your most enjoyable job of the year. However, filing early means the task is no longer hanging over you so you.
Get your tax refund faster
If you are due a repayment, the refund is triggered when you file the return. Why wait longer than you need to get your money back?
Planning ahead to pay your tax
Once we have calculated your tax, you will know just how much tax you need to pay and when. This should help avoid finding yourself in a situation where you have not budgeted enough funds to pay your tax on time. Paying late incurs interest charges and potentially also late payment penalties.
File before 31st July to make sure you are not paying more than you need to
Your payments on account for 2023/24, due on 31st January and 31st July 2024, are based on your tax liability for 2022/23. However, if your tax liability is less this time, you will be overpaying on your second payment on account in July 2024. You will then have to either wait for your refund or, depending when you file your return, use the overpayment to reduce the amount you owe in January 2025.
File by 30 December to pay the tax through PAYE
In some scenarios it is possible to spread your tax bill by paying through an adjustment to your tax code. Your tax liability must be less than £3,000, you must have a source of income taxed through PAYE from which the tax can be collected, and the 2023/24 return must be filed online by 30 December 2024. Coding the liability out through PAYE avoids having to pay your tax in lump sums.
Less chance of errors or omission
Giving yourself plenty of time to gather your documents together means that you are less likely to miss something and we have more time to spend with you to discuss your business.
Having the information to hand if you need to raise finance
Lenders want details of your income to understand if you can afford the repayments. If you have already had your accounts prepared, and you have filed your return, the information is readily available to hand.
More up to date information
When we prepare accounts for tax purposes, they look back over historic periods. The later we prepare your accounts, the further back you will need to recall information when we have queries. It is also much better to have accounts which are more up to date to help you understand how your business is performing. You might also like to read our article on why you could benefit from having management accounts.
If you want to get ahead and have your return completed as soon as possible please get in touch with us, we are here to help.
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