Nobody enjoys the hassle of having to file their Tax Return, especially when you’ve left it to the last minute and find yourself having to rush around (amid panicked phone calls to your accountant) to get everything sent over to HM Revenue and Customs (HMRC) before the 31 January, online, or 31 October, paper, deadline.
If, as a small or medium-sized (SME) business owner, you recently received a letter in the post telling you it’s time for you to complete your annual Tax Return, you may want to consider getting it done early this year in order to avoid the otherwise inevitable rush.
And if that doesn’t convince you, maybe the following four points will:
You’ll Get a Tax Refund Faster
If you complete your Tax Return early, and pay any tax owed, you’ll receive a tax refund much sooner (assuming you’re owed tax back) than if you submit your Tax Return and money owed in January; especially towards the end of the month nearing the 31 January online deadline.
There’s no downside to receiving a tax refund sooner; and though interest rates may not be the highest they’ve ever been, the sooner you receive your tax return the sooner it can be sat back in your bank account earning interest!
You Can Manage Your Cash Flow Better
With that said, if you complete your Tax Return early you don’t have to pay the tax you owe until the 31 January deadline (and the 31 July second payment deadline, should this apply to you).
This buffer between filing and payment allows you to manage your cash flow better, as, depending on the size of your tax bill, you can make a budget to ensure you put a certain amount aside each month up until January ahead of making your payment.
You’ll Avoid Any Potential Penalties
If you file your Tax Return late (or send a payment late) you’re automatically issued with a £100.00 penalty; even if you miss the mark by just a few hours.
For this reason, when you submit your Tax Return and payment early you’ll avoid a wealth of expensive fees and penalties that could have otherwise come your way if you’d filed late, including a:
- £100.00 late filing penalty,
- £10.00 daily penalties after 3 months, up to £900.00,
- £300.00, or 5 percent of your tax due after 6 months,
- £300.00, or 5 percent of your tax due after 12 months.
You Can (Potentially) Use a Tax Code
If you’re a small business owner who owes less than £3,000 in tax payments and you complete your Tax Return by 30 December, you can opt to have your tax collected through your tax code over the coming year in a bid to spread out your payments.
If your business’s small size means you’re currently receiving tax credits or benefits, consider submitting your Tax Return before 31 July in order to send the Tax Credit Office real, up to date income figures (rather than estimates) to help you receive the tax credits or benefits you’re owed sooner.
Experienced Tax Accountants
To speak with a professional to discuss how to complete your Tax Return (both the collection and submission process), or for any other reason, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.