What comes into your mind at the mention of the word tax?
Well, I guess, two things always crop up: deadlines and fines.
But tax is an inevitable part of society and has been paid since time immemorial. And, as a matter of fact, fines can be eliminated if you adhere to deadlines. Therefore, the solution squarely lies with you.
That said, as tax specialists, we understand that tax jargon and deadlines can be very confusing for non-specialists. That is why VW Taxation takes the initiative of enlightening those who are CIS (Construction Industry Scheme) registered, self-employed individuals, and general self-employed individuals on why filing your tax return early is important.
Tax Year and Deadlines
The UK tax year commences on 6 April and ends on 5 April of the subsequent year. This means that for year 2017/2018, the tax year commenced on 6 April 2017 and ended on 5 April 2018. As a result, the deadline for submitting your tax returns for the tax year 2017/2018 is on the midnight of 31 January 2019. So, if you had any untaxed income between 6 April 2017 and 5 April 2018 – for example you were self-employed or even earned some money from rental income, then you need to submit a self-assessment tax return by the midnight of 31 January 2019.
It’s important to note that the midnight of 31 January 2019 is only a deadline. This means that you can file your tax returns earlier. Actually, most self-employed individuals file their returns in April/May. And, as tax specialists, we strongly advocate for early filing of tax returns. Our experience handling issues of tax has taught us that last minute rush often results in stress and fines which can be prevented.
Why file returns early?
Here are our top 3 reasons for filing your tax return early. They may sound obvious but they are very strong.
Miss the January Rush
Why procrastinate until January when everybody is doing the last minute rush to start filing your tax returns? You don’t have to be caught up in this mess. The experience is stressful and you will not like it. You end up being confused due to the rush and, as a result, you may fail to declare some income-which may attract a fine. Grab the earliest opportunity to sort out your tax matters.
Claim Any Owed Taxes
Early filing of your tax refunds with the HMRC means that you are still obliged to remit your tax liability by the 31st January (balance and the first payment on account- if applicable) and 31st July second payment on account- if applicable). However, the advantage with early filing is that you are likely to receive your refunds fairly soon after submitting your return. HMRC does not have to wait for 31st January to refund you.
Business Finances
Early filing of your tax returns and calculating the tax liability arising provides you ample time to start saving for the bill and by extension planning on your cash flows. Late payment of tax will attract a £100 Fine from HMRC and possibly some late payment penalties. Therefore, early filing of returns helps in planning your business’s cash flow.
What next?
If you are in self-employment, then 5 October 2018 is the deadline for notifying HMRC of your employment status so that they are aware you need to file a tax return. This applies to those who were self-employed during the 2017-18 tax year and had a tax liability of over £1,000 when you submitted your tax return for this period.
If you want to submit paper returns rather than filing them online, then 31 October 2018 is the deadline. However, we encourage you to file your returns online with an HMRC Tax Agent.
VW Taxation can help you file your returns online. After all, under the UK government’s Making Tax Digital initiative, paper returns may no longer be an option from April 2020.
Having any tax queries? Contact VW Taxation for help.
