If there was a list of tasks ever made about the most tedious and boring tasks ever, filing your tax return must be amongst the top 5.
Laziness, forgetfulness, or plain confusion, whatever might be the ‘excuse’, the fact is, the earlier you get the task of filing your return completed the more relaxed you will feel.
Filing the tax return doesn’t come only with mental benefits, and here we’ll tell you how filing your tax returns early can be beneficial then filing late.
Taxes are not fast-tracked
Filing your return isn’t synonymous to paying it. Filing your return early gives you an opportunity to plan your finances accordingly. With the coronavirus still creating havoc on businesses, it’ll be easier to know what your tax liability is, so you know how much you need to set aside for the end of the tax year. You are obligated to pay any liability by the normal due dates which are;
31st January – balance payments if any and/or first payment on account
31st July – your second payment on accountAs per Government’s Coronavirus support measures, the July 31st payment on account will automatically be deferred until 31st January 2021. You will not receive a penalty or be charged any interest for deferring as long as you make a payment before 31st January 2021.
If you would like to pay your second payment on account, you can do so at any time between 31st July 2020 and 31st January 2021.
If your tax liability is under £3000, you have the option of selecting that your tax be collected via your tax code.
Remember the government have now introduced the option to spread the payments over a 10-month period.
Refunds are fast tracked
One of the biggest advantages, especially now in the times of a pandemic and a disrupted revenue stream one can avail by filing their return well before the deadline, is that any tax refund that you might be eligible to, you can receive it quicker resulting in cash flow which could be beneficial given what we are all facing with this pandemic.
The reason for faster processing is due to the fact that near the filing date HMRC is quiet busy, hence refunds take longer to process.
Penalties on late filing are a big cause of concern. You are straightaway fined £100 for being a day late on filing your return and £10 more on top of that for each day that you are late, with the cap of £1000. Additional penalties apply if you fail to file the return after 6 months or a year.