So many people file their tax returns at the last minute every year. However, filing it early could save you some stress and some money.
If you file a self-assessment return and you’re employed, your employer should have sent you your P60 by now. So, with this in hand, there really is no reason to wait around. It is estimated that 700,000 people submitted their tax returns on deadline day last tax year, with 26,562 of people filing in the final hour. Avoid the stress at the start of 2021 by filing yours now, for the following reasons.
1. Help you to be organised
With the coronavirus pandemic wreaking havoc on the economy this year, planning is crucial to avoiding or at least alleviating any future financial shocks.
The sooner you complete your self-assessment, the sooner you’ll know exactly how much you need to set aside each month to make sure you can afford it.
2. Get any tax refund, quicker
If you are owed a refund from the HMRC, it will be processed as soon as you file your return. By filing this before the deadline rush, it should be speedier to process your refund. You can see if you might be owed a tax refund by checking how much you have paid in your personal tax account.
3. It could help you get a mortgage
If you are self-employed, getting a mortgage to buy a home can be difficult. There are so many administrative processes to go through to prove your affordability. If you’re planning to buy a house in 2020, you’ll need to prove your earnings with an SA302 form. This form will show how much income you have declared. Most lenders will want to see your most recent three forms, so you are likely to need one from the 2019/20 tax year. Filing your tax return now will help you send your mortgage application sooner rather than later.
4. You can opt into PAYE to pay your bill
If you are employed and file an online tax return before the 30 December 2020, you will be able to choose to pay your self-assessment tax monthly, via PAYE. However, you must have a tax bill of less than £3,000 to be eligible. Failing this you will have to pay any tax upfront, but you will have until the 31 January to file your return.
5. You do not need to worry about fines
By filing your return early, you will avoid any late fines. The threat of getting fined is part of the reason that leaving a tax return to the last minute is so stressful. If you submit the return one day late there is a £100 fine. Then after three months, you are fined £10 more for each day until you reach the £1,000 cap. Additional tax geared fines are piled on top of that if you are more than six or 12 months late. You might also encounter unexpected complications if you leave it to the last minute, potentially delaying you past the deadline.
We hope you found this helpful. For more information regarding Personal Tax, please feel free to email Gary Olding directly.