I know – doing your tax return doesn’t fill you with enthusiasm but we all know it has to be done.
This year, more than ever, it is a good idea to get your tax return completed and filed early. Here are a few reasons why:
You will know now what your tax bill is going to be at 31 January 2021 and you can start budgeting to be able to pay this on time. Submitting your return now does not mean the tax is due any earlier
- Tax refunds
If you are due a refund of tax, this will be repaid to you as soon as your return is submitted – you do not need to wait until 31 Jan for this
- Availability of Information
You will have the information to hand. P60’s should have been received recently and other financial information that you may receive in relation to your income is normally sent to you in April or May, so put it altogether now, before you have a chance to lose it!
If you are a sole trader, you will need to prepare your accounts to 5 April 2020 (usually) and again this may require you finding information and answering queries from your accountant. Not only may this information still be fresh in your mind, but if you are not working at the moment, you may have some more time to be able to complete this task now.
- Tax Credits
The tax credits renewals form has to be completed by 31 July, and being able to produce accurate figures will ensure your claim is accurate for the year, and you won’t end up having to repay amounts you were not entitled to.
- Tax Code
If you have your tax collected via an adjustment to your tax code, submitting this early will help ensure that your tax code is accurate, and you are not over or under-paying tax during the year.
Finally and possibly most importantly- its done! One less thing to worry about towards the end of the year.
Don’t forget that any payment that you were due to make on account of your 19/20 tax bill at 31 July 2020 can be deferred. You don’t need to request a deferral with HMRC, it will be done automatically if you do not make the July payment.
So although it may not be your favourite job, there are lots of good reasons to get it out of the way now. Call it a project to do alongside your kids doing their school work and set yourself a deadline. Then give yourself a large gold star when it is done!