Are you someone who likes to leave everything to the last minute? Do you enjoy the pressure of working to a tight deadline?
While some people say they do their best work under pressure, in my experience, they are actually doing their fastest work – and that often isn’t the same.
Tax deadlines come around every year, and while I understand that everyone in business has other priorities and demands on their time, it still surprises me how many people choose to leave this high-priority work until the last possible moment.
But why not?
What are the advantages of getting your tax return sorted early?
Avoiding fines for breaching
Anyone missing the deadline for filing their tax return faces the potential of fines, which increase in amount the longer you delay. You’ll also have to pay a penalty if your tax payment is later than it should be (31st January). You can check the latest penalties on the gov.uk website (Tax Return penalties).
Dealing with unforeseen events
While you may think you won’t miss the deadline, I’m sure you’re always organised and don’t want to pay the fine after all; many people miss the deadline due to something they hadn’t anticipated. Whether it’s increased demands in your business, illness – your own or key personnel, or even death, the impact of such an event will be significant and dealing with the additional stress of a tax return will only cause more stress.
Receiving faster tax rebates
As well as avoiding unnecessary payments to HMRC, another benefit to having your return completed early is the possibility of getting money back from them. Tax rebates are generally handled more quickly on returns which are submitted early, as the team themselves are less busy.
Understanding your thresholds
It’s important to understand the implications of any change in your tax threshold as early as possible so you can allow for additional payments – for example, the VAT threshold. When your turnover reaches the VAT threshold, you have one month following the month on which you exceeded the amount to register. If you don’t regularly review your figures but ignore your accounts from the end of March to January, you may be eight months late to register, inciting penalties and interest payments.
Managing your liability in advance
Having completed your tax return earlier than necessary, you’ll have a clear picture of the amount due to pay. This gives you time to save if you need to, or you can make use of any additional savings you have available.
Improved accuracy and confidence
Leaving things close to the deadline – for most people – means more rushing and more chance of making mistakes. On the other hand, being prepared in advance means less rush and, therefore, being less likely to have missed anything, particularly as things will be fresher in your mind.
A happier accountant
Of course, this may matter more to me than it does to you, but I can assure you it benefits everyone. No one wants to be nagged; no one wants additional stress. Why not aim to make your accountant happy this year?
There are real benefits to completing your tax return early and not leaving everything to the last minute. While these include intangible things, like stress on your part and your accountants, they also include real monetary benefits – so why not do what you can to manage your accounts earlier?
If you need help understanding how you can get more organised with your accounts, speak to your accountant or get in touch with me at kate@katebrownaccountant.co.uk.