Why is it important to file your tax return early?

Do you earn money under the Construction Industry Scheme (CIS)? Do you have a payment on account to make in July? Want to be one step ahead on your finances? There are many benefits to filing your tax return as soon as possible, and this article will go through them and hopefully convince you to make the most out of filing early.

Why is early filing important?

Advantages for everyone It's important to mention that your tax return can be filed the day after the financial year ends, from 06 April onwards. While there are different bonuses for filing early depending on your circumstances, there are things that everyone can benefit from. For example, you can file as early as 06 April and find out what your tax bill is; however, you won't have to make payment on said tax bill until 31 January of the following year. This gives you over 9 months to save up or pay in instalments to cover your tax bill. Construction industry scheme workers If you work under the Construction Industry Scheme and expect a rebate this year, you may as well file as soon as you can and get your money back from HMRC as soon as possible.

Change in reporting dates for self-employed

For the 2024 tax year, HMRC is changing how many sole traders and partnerships report their earnings. If you currently report your yearly earnings to a date that isn't from 31 March to 05 April, then HMRC will use the 2024 tax year to change your reporting dates. This will increase your tax bill, which will be spread across the next 5 years. To learn more about this, please read our other article that covers the topic in detail: https://www.shortandsons.co.uk/post/your-accounting-year-end-may-change-in-2024-here-s-what-you-need-to-know. If your dates are changing and your tax is expected to be higher, it would be advantageous for you to file as soon as you can, so you get a head start on your situation and can plan your finances for the year, since you will know what you have to pay, but have over 9 months to pay it as long as you file ASAP.

Payments on account in July and a fall in earnings Many taxpayers will have their second payment on account becoming due in July. Short and Sons Accountants recommends filing your tax return before then, as there are possible benefits to doing so. For example, if you have earned less this tax year and your payments on account will be more than your tax bill, your July payment on account that you will soon have to make may be reduced or even removed altogether. This benefit can be taken a step further because if you have already made your first payment on account and it fully covers this year's smaller tax bill, then any left-over payment on the account can be returned to you as a rebate! Worthy mentions

The Time To Pay scheme can normally only be utilised once every three years (unless there are extraordinary circumstances). To avoid being left stranded without the possibility of a payment scheme at the last minute, you should file early, and stay on top of what you have to pay by giving yourself plenty of time to pay it.

Filing early also reduces the risk of identity theft, as it limits the window of opportunity for someone to file a fake tax return using your information.

If you wish to be on top of tax this financial year and make your life easier, contact Short and Sons to complete your return as early as possible and give yourself plenty of time to prepare!