By Ryan Meredith
The new tax year has come around quickly for many of us and you’ll notice that the team at de Jong Phillips are keen to work on your tax returns as early as possible.
In case you were wondering why here are 7 reasons to file your tax return early this year:
1. Receive your tax refund earlier
If your circumstances have changed and you’re due a tax refund, the earlier you submit the tax return, the earlier HMRC will pay you this refund. You could even use this to pay for your summer holiday this year!
2. Reduce your July 2021 payment on account
If your income has reduced since 2020, you may be in a position to reduce your payment on account for 31 July 2021 based on your 2020/21 tax return. This will ensure that you don’t part with your hard-earned income unnecessarily only to wait months to receive a repayment.
3. Budget for your tax bill
There’s nothing worse than finally filing your tax return and finding you’ve got a very small amount of time to find the cash to pay it as you’ve missed the opportunity to budget to set aside money for your tax bill. Remember filing your tax return early does not change the payment deadline of 31st January!
The consequences of this could be that you don't have the money and have to arrange a time to pay with HMRC or worse still, you need to declare additional salary or dividends which drives up your tax bill in future years.
Planning to pay your taxes will mean that you have the time to make better-informed decisions without the stress and need to act quickly.
4. Have records available for mortgage references
If you’ve been through the mortgage process, you’ll be only too familiar with the mortgage broker or bank asking that question you dread. “Please can you provide your most recent tax return information?” Only to realise that you haven’t filed this yet. What then follows is a mad rush for the work to be completed and lots of stress to boot!
Especially with the year that we’ve had, banks will be requiring more recent information when looking at lending decisions, we can therefore reasonably expect that they will want the information from your 2020/21 tax return. The lucky ones will have increased their income this year, this could also lead to more flexibility with your mortgage application.
5. Identify opportunities to save tax earlier
Working on your tax return early affords you a unique opportunity to review your personal affairs to ensure that you make use of all available reliefs and allowances.
It will help you to identify potential ways to save tax as early as the 2021/22 tax year.
6. HMRC will be less busy with queries
This may not sound like a benefit, however, it really is. Have you ever tried calling HMRC in December or January? If you have, we feel your pain!
Avoid the surge in demand for HMRC at these times, this will make it so much easier to contact HMRC for access to your gateway account, to register for self-assessment, query your tax return and also ensure earlier processing of the refunds mentioned above.
7. Peace of mind
This benefit is often overlooked and the joy of filing your tax return at the start of the tax year is only ever experienced by those that have achieved it! Don't ruin your Christmas with thoughts of filing your tax return.
Every year we help more and more of our clients file their tax returns earlier in the year, with the most common reaction being, why have I not done this before?
We know that filing your tax return is not exciting for you, it isn't for us either, however, procrastinating means that you always have the thought of another task to be completed. Let us have the information and we will do the hard work for you, ticking an item off of the ever-growing to-do list!