We all are waiting for the new year 2023 which is just a few months away. This always comes with the thoughts of tax returns and here we aim to bring your attention to the benefits of filing your tax return early rather than waiting for the last-minute submission. The best part is that the deadline for submitting tax returns always remains the same which is 31st January, and this makes us all well aware and vigilant about the last-minute submissions.
Moreover, the awareness of the deadline for filing tax returns can keep you safe from penalties because you will be vigilant and keep yourself organised to meet the deadline. You must require a little bit of support from your accountant to keep the process error-free. It is important to maintain a record of your business expenses and income throughout the year to keep the required information updated and easy to access for the process as well. The better the record, the more accurate the process will be. In this guide, we will help you to realise why is it important to file tax returns well on time.
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The Time is Money – The Benefits of Filing Tax Return Early
It is quite usual in the business world that your financial affairs tend to change and fluctuate with time. So this is important to keep the details in order, this will allow you to give thinking space to any available opportunities that can be beneficial for your tax planning. The earlier you will plan to file your tax returns and be prepared for the required details by being organised, the more time you will have to think and get benefits from the available opportunities.
You will be ready to gather the required information organised and collected well before time. This might include a bank statement, other financial documents or completing the process. The experts should use the apps rather than manually arranging all the data which is a lot time-consuming. Rather invest your time in better and more productive business activities to increase your business valuation.
Meet the Tax Deadlines
If you are seeing yourself delaying the process, be ready to not beat the deadline and then face unfavourable circumstances for your business. Because this will put you struggling with hefty fines and penalties for not taking the deadlines seriously. This does not matter whether you had outstanding tax or not. If you are late, you will be fined. The automatic filing penalty is £100. However, if the delay in filing the tax return is for three months or more, you will have to pay £10 for one day as your daily penalty until it reaches the peak of £900.
An additional £300 will be charged as a fine in case the filing process is delayed for six months or more. This process will be repeated and the amount will turn double in case the delay lingers on for 12 months.
You will Soon Get a Tax Refund
In case there has been an error observed in the tax codes sent by HMRC to the employees or directors, you should expect a refund of tax where you are an employee or a director. However, there is an exception to the rules of tax refunds for the ones working as building subcontractors which are being operated by the Construction Industry Scheme.
Here again, comes the benefit of the early finding of tax refunds. The earlier you will be in completing the process of submission, the earlier you will find yourself in the list of eligible individuals to get the tax returns in case of sending the wrong tax codes by HMRC. This takes quite a long proof to refund the taxes by HMRC, so it is recommended not to wait until the last minute of January to complete the process. Because that is the high activity time for HMRC and you do not want to wait for so long to get the tax refund.
File Now and Pay Later
If you plan to make the calculations to find out your tax liabilities, this will allow you to file your tax returns as early as now. By this, we mean that you will have a lot of spare time to think about how to manage and budget for your cash flow. You will be able to focus on future tax payments in a better way when there will be no hurry of meeting the deadlines. There is a tendency of the increased risk of mistakes when you are in a hurry to file your tax returns because you are about to hit the deadline.
So to keep yourself away from the late submission penalties and error fines, try to be early and complete the process now. Moreover, this is only a recommendation that is ideal and beneficial for your business, this does not make you obliged to pay way before the date even when you are not ready.
The Bottom Line
Now that you have gathered a fair amount of information about the benefits of filing your tax return early, we can bring the discussion towards wrapping up by saying that early filing of tax returns is beneficial for your business in several ways. However, it is imperative to understand that this will not make you liable to pay early if you are not ready yet with your details and payment. We hope these few minutes of reading will help you to file your tax returns on time and keep yourself away from fines and penalties issued by HMRC.
Disclaimer: The information about the benefits of filing your tax return is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.