It is of course so easy to put off self-assessment until later, perhaps even the last minute. However there are significant benefits to getting it done early and ensuring your tax affairs are up to date.
Find out your liability
By filing your return earlier, you will have the benefit of knowing your liability earlier. This will allow you to claim your allowable tax reliefs as soon as possible as well as giving yourself more time to budget for payment of tax owed. It may even be possible for tax owed (up to £3,000) to be collected through your salary or pension.
You will also avoid the risk of HMRC interest and penalties if you miss the final deadline.
Receive an earlier repayment if one is due
If you are fortunate enough to be due a repayment, then why not benefit from having it in your account earlier. It could be particularly useful for your cashflow, particularly in today’s economic climate.
COVID-19 July payment deferral
You are usually required to make payments on account based on your previous year’s income tax liability. This year however, the government’s COVID-19 support measures allows automatic deferral of the 31 July payment, until 31 January 2021. Although the July payment will be automatically deferred, calculating your tax liability early will provide you with more accurate details and knowledge of your upcoming tax liabilities into the 2021 year (so that it doesn’t come as an unexpected ‘surprise’ next year).
Stress free Christmas
Save yourself the stress of filing your return at the end of the year. Most of us would rather put off completing their tax return but you might just be glad of one less worry when the Christmas rush approaches.
If 2020 and COVID-19 has demonstrated one thing, it is the power of the unknown. If you wait until the last minute to file your return, unknown factors such as illness, mislaid information or disruptive weather could add additional stress. Dealing with your tax affairs ahead of time avoids the headache of missed deadlines and HMRC interest and penalties.
Find out how Kingston Burrowes can help with your self-assessment today.