The benefits of filing your Tax Return early

Completing a tax return can be time-consuming and often stressful – especially if you decide to put it off until the last minute. Although it’s tempting to leave it until later in the year, there are many benefits to filing your Personal Tax Return early.

This short blog outlines six reasons why you should start thinking about filing your 2019/20 tax return.

If you haven’t already, you will need to register in advance

If you haven’t previously filed a tax return, you will need to register online.

Once you’ve registered online, HMRC will send you a letter with your 10-digit Unique Taxpayer Reference (UTR) and an account will be set up for the self-assessment online service.

Within 10 working days (21 if you’re abroad) you will be sent an activation code for your online account. You’ll need to use the activation code the first time you log in.

If you wait until the Christmas and January rush to register it can take longer to get set up – as HMRC is extremely busy in the lead up to the 31^st January filing deadline.

Know your tax liability

The sooner you file your tax return, the sooner you will be aware of any tax liability. Filing your tax return early gives you time to consider any tax planning opportunities and claim any allowable tax reliefs as soon as possible.

Another benefit of filing early is that if your tax liability is less than £3,000, you can opt to have it collected through your tax code.

Please be aware – if you receive benefits or tax credits, you need to submit a renewed claim annually by the 31^st July and notify the Tax Credit Office of your income.

You have time to plan for any tax owed

Filing your tax return early does not mean you will have to pay your tax sooner – it merely gives you longer to plan and budget for the payment. If applicable, you are required to pay any tax liability by the following deadlines:

• 31^st January – any tax owed for the previous year (also known as balancing payment) and your first payment on account
• 31^st July – your second payment on account

As part of the government’s Coronavirus support measures, the July 31^st payment on account will automatically be deferred until 31^st January 2021. You will not receive a penalty or be charged any interest for deferring as long as you make a payment before 31^st January 2021.

If you would like to pay your second payment on account, you can do so at any time between 31^st July 2020 and 31^st January 2021.

Receive your tax refund sooner rather than later

If you are due a tax repayment, then submitting your return early will result in your refund being processed sooner rather than later, which could prove beneficial for cash flow purposes over the summer/autumn months. If you wait until January, refunds typically take a lot longer to process – as this is one of the busiest periods for HMRC.

Avoid penalties for filing late

If you do not file your self-assessment tax return by the 31^st January deadline, you will be issued with an instant £100 late penalty.

If you haven’t filed by the 1^st May, a daily penalty of £10 will start to accumulate, up to a maximum of £900 (90 days).

You will also be issued with a £300 fine, or 5% of the tax you owe (whichever is greater) if your return is six months late, and this will double if you still haven’t filed within a year.

Take advantage of early filing discounts

If you plan to use an accountant to complete your tax return you may find they offer a pricing structure which could save you money if you file early or become more expensive if you leave it until the last minute. This is due to the fact that for many accounting firms (much like HMRC) the months leading up to the January deadline are often their busiest months.

Churchill Knight offers a more competitive rate for tax returns completed earlier in the year – to benefit from our early filing discount simply email personaltax@churchill-knight.co.uk or call 01707 871622 to get started.

Do I need to submit a Personal Tax Return?

You need to file a 2019/20 self-assessment tax return if you earn income from one of the following sources:

• You are a higher rate taxpayer
• You receive rent or income from property in the UK
• You are a sole trader or are self-employed
• You are the director of a limited company and get paid via dividends
• You receive any form of untaxed income, capital gains or losses
• You have your own pension fund or specific investments/savings
• You receive foreign income even if you do not normally live in the UK
• You receive other untaxed income specified by HMRC

Save time (and stress) by enlisting the help of our expert Personal Tax team

When you appoint Churchill Knight & Associates, you’ll save yourself hours of stress and will have complete peace of mind that experts are handling your tax return. Upon receiving all the information required to complete your return, we guarantee to file it lawfully, accurately and on time to HMRC on your behalf.

To enlist the help of our Personal Tax team to complete and file your 2019/20 tax return or to discuss your circumstances, give us a call on 01707 871622 or email personaltax@churchill-knight.co.uk.