The benefits of submitting your self assessment tax return before the deadline

If you’re a sole trader, a partner in a business partnership or earning over £100,000 then you will need to complete a self assessment tax return. You might be wondering why I’m talking about self assessment tax returns when it’s only March. Well, HMRC will start accepting tax returns from 6^th April each year. If you are submitting a paper return then you have until 31^st October to submit your return. If you’re submitting them electronically then you have until 31^st January of the following year. Once you’ve submitted your return, you have until 31^st January to pay any tax owed. So if you’ve got over 9 months to submit your return why would you do it on the 6^th April? Why not take your time and do it later?

Let me tell you a little story about Steve. Steve was a sole trader and knew they had to complete a self assessment tax return each year. 6^th April rolls round and Steve knows that they can submit their return now if they want to. However, Steve is busy with work and figures they have 9 months so why rush? The months tick on and on and on and before they know it it’s already 30^th January. Steve starts panicking and rushes to gather all their paperwork together to start filling in their return. They get half way through and their computer crashes, losing all of their progress. They finally get to the end and then realise they’ve made a mistake and have to go back to the beginning again. Time is ticking on and stress levels are rising. Steve is now operating purely on a mix of caffeine and panic. They just manage to submit their return and breath a huge sigh of relief. Little did they know that a few weeks later they would be receiving a letter from HMRC stating that they had actually missed the deadline by 5 minutes and were receiving a fine.

Don’t be like Steve! There are so many benefits to submitting your self assessment tax return early (and I don’t necessarily mean on 6^th April but certainly earlier than 31^st January!). The list below is just a few of the benefits:

• Less stress – Having a looming deadline hanging over your head is not going to help your stress levels. Sorting out your tax return earlier eliminates that stress so you can concentrate on better things.
• Avoid late filing penalties – If you’ve submitted your return early there’s no possible way that you can be given a late filing penalty! On the fluke chance that you do get one you can stand on your high horse and shout “I SUBMITTED THIS IN APRIL!” with pride and get it removed.
• Know your tax bill early – You don’t have to pay your tax owed at the same time you submit your return. If you’ve completed your return in April, you’ve then got 9 months to plan, budget and save for your bill. Just don’t forget to pay it before 31^st January or you’ll be back to stress, fines, sleepless nights etc.
• Identify errors before it’s too late – If you submit your return and then realise you’ve made a mistake, you’ll have plenty of time to go back in and edit it without risking going over the deadline.
• Reduce payment on account – If you complete your return before 31^st July and you discover that the tax you will owe is significantly less than the previous year, you can apply to reduce the payment on account that you’ll be making in July.
• Get any refund due sooner – Once you’ve completed your return if you find you’re owed money back from HMRC you’ll get it much sooner than if you waited till January. Why would anyone want HMRC to keep hold of their money for 9 months?
• See how your business has done – Completing your self assessment tax return is like the final step in your businesses financial year. Once it’s completed you can see exactly how well you’ve done that year. You can then use this to plan for the next year and set realistic targets. If you wait until January to do this, most of the year has already gone so any targets you wanted to set for that year will be very difficult to achieve in the last 3 months.

Hopefully that list has made you put a notification in your calendar to submit your self assessment tax return early! I wonder if HMRC give out a prize for the first return completed? That would certainly be an incentive!

However, I understand that for a lot of people it’s not so much submitting the return that’s the difficult step but rather it’s getting their accounts in order first and making sure they’ve included everything they’re allowed to include. If this sounds like you, then please use the button below to get in touch so we can discuss how I can help.