Plan now for next year’s tax return: three top tips
Latest figures from HMRC show that 93.68% of Brits who were required to submit a self-assessment tax return had done so by 23:59 on 31 January.
However, 735,258 faced a nail-biting race to the deadline by filing on the final day and a further 731,186 taxpayers failed to meet the deadline, facing an automatic £100 fine unless they come up with a reasonable excuse.
If you’re one of the millions of people who had to file a tax return, the thought of getting started on next year’s is probably furthest from your mind.
But getting started early can take some of the pressure off, both emotionally and financially.
“Advice aimed at taxpayers who need to submit a tax return tends not to begin in earnest until the deadline is looming. However, unnecessary stress as well as potential financial penalty can be avoided by planning your self-assessment early,” said David Redfern, tax preparation specialist and managing director of DSR Tax Claims.
“If you need to file a tax return by the end of January 2020, you should already be aware of that fact now so you can take early action to make the process run as smoothly as possible.”
Here, Redfern shares his top three tips for getting ahead of the game:
Spending time now getting your financial and business records organised will cut down on hassle later.
Redfern said: “Knowing what your UTR [Unique Taxpayer Reference number] is, making sure you can lay your hands on letters from HMRC, as well as financial information such as bank statements, invoices and receipts will make your taxes much easier in the long run.
“You should also check you have an online HMRC self-assessment account and that you have the login details. These will all add to the worry of self-assessment the closer to the deadline you leave it.”
It’s an HMRC requirement to keep adequate business records to provide evidence for your tax return. Thorough and well-kept business records could potentially ensure that all business expenses can be tracked and accounted for.
File in April
Tax returns for 2018/19 can be completed as soon as the tax year ends on 5 April.
“Most people are aware that the self-assessment deadline is 31 January in the year following the end of a tax year, but that doesn’t mean you have to leave your taxes so close to that deadline,” said Redfern.
“You might want to wait a few weeks after the end of a tax year to make sure you have all the relevant information to make a start on your tax return, but the sooner you start, the more time you have to find solutions to any problems you might encounter – whether they are technical problems which might impact on your ability to submit a tax return or missing financial information you need to recover.
“Completing and submitting a tax return early will not have an effect on payment dates for your tax bill.”
Think about how you plan to pay your tax bill and budget where possible to prevent any last-minute worries.
“The earlier you complete and submit your self-assessment, the sooner HMRC will calculate how much tax you owe and you can take steps to budget for that tax bill,” said Redfern.
“Payments on account should mean that you are making a balancing payment rather than paying in full, unless you are a first-time self-assessment taxpayer, but HMRC will allow you to set up a budget payment plan where you pay in instalments if that is an easier way to manage your finances.
“Taxpayers who are worried about their ability to pay their tax bill should contact HMRC as soon as possible to discuss their options.”