With the current economic climate in the UK, you might be tempted to hang on to your cash rather than paying your tax bill early. While this might be the right option for you and your business, there are also convincing arguments for getting your tax bill sorted out now.
Here are five reasons you might want to be a Self Assessment early bird - let’s get stuck in.
Small business owners often have a to-do list as long as their arm, so getting something checked off that list - especially something that can be a big source of stress like your tax return - can be a huge relief. It can be a slog to reach that finish line, but it’ll feel so worth it when you can breathe a sigh of relief for another year.
If you’re scrabbling to get your tax return together for the 31st January deadline, you’re probably going to end up with a few more miscalculations and typos than if you were preparing it well ahead of time. Allow yourself the time and space to prepare everything properly and you won’t find yourself in a sticky situation trying to fix mistakes later on.
Better cashflow insights
Getting your books ready to file your tax return means that you’ll know exactly how much tax you’re liable for - and you can budget accordingly. If you wait until close to the 31st January deadline, you risk finding out you have a larger bill than anticipated - and potentially one you haven’t budgeted for. Filing your tax return in good time is a healthy cashflow habit to form, if you haven’t already.
Avoid a fine
Did you know that if you file your Self Assessment tax return late, you’re liable for a fine? It’s £100 for anything up to three months late, with further penalties for any returns filed later than that. On top of this, you will also be charged interest on late payments. This rate is currently set at 4.75% by HMRC.
More free time over the festive season
There’s nothing worse than being overburdened with work over the holidays - particularly if you’d rather be celebrating Christmas and New Year. While you might still be relatively busy with work over this period, one thing you can clear up in advance is tax admin. Check it off your list now and focus on where the next mince pie is coming from instead.
If you’re filing your tax return for the first time, it’s worth noting that it can take up to 10 days after HMRC registration to receive the codes you need to file, so make sure to set some extra time aside for this.
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Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this blog post. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.