Here’s why summer is a great time to get your Self Assessment sorted
This article was first published on 11 August 2015 and was last updated on 3 August 2016.
The summer months are upon us and the 31st January deadline for online Self Assessment filing may feel like a far-off prospect. While you might be tempted to leave it for a rainier day, here are four reasons why now is a great time to get your Self Assessment sorted.
You’ll be able to register with HMRC more easily
If this is the first year you’ve prepared a tax return, you'll need to register with HMRC to file your returns online, if you haven’t done so already. Registering to file online isn’t as immediate as you might think: it involves HMRC sending you an activation PIN code in the post, which takes at least seven days to arrive.
If you register with HMRC now, then you should be all set to file your tax return in the next couple of weeks. Wait until December, however, and you’ll risk your letter and activation PIN from HMRC getting caught up with the Christmas post and potentially taking longer to arrive - not ideal!
You’ll have more time to find an accountant
Unless your business is the very simplest and smallest of sole trades and you have no other income (e.g. income from a job or property), it’s a good idea to ask an accountant to help you prepare or check your tax return.
When it comes to choosing an accountant to work with, it’s worth taking the time to find someone who you feel comfortable with and who understands your business - something you may not have the chance to do if you leave your Self Assessment filing to the last minute! Unsurprisingly, accountants are very busy in the run-up to tax return season and many of them charge an extra premium to new clients who join them in the months prior to the Self Assessment deadline.
Starting now will give you a much better chance of finding an accountant who will not only help you prepare this year’s tax return, but will work effectively with you on an ongoing basis.
You’ll be able to budget for the rest of the year
Once you’ve completed your Self Assessment tax return and you know how much your tax bill will be for the 2015/16 tax year, you’ll be in a far better position to budget for the coming months. Remember that if you file your tax return now, you won’t have to pay your tax bill until 31st January 2017, so there is plenty of time to plan ahead.
Bear in mind that if your tax and NI bill is over £1,000, you may have to make payments on account in January and July 2017. HMRC should notify you if this is the case.
You’ll avoid incurring any fines
Once you’ve filed your Self Assessment tax return and paid your 2015/16 tax bill, you can relax in the knowledge that you won’t incur any of the following penalties for late filing:
- a £100 instant fine for not submitting your return by the January 31 deadline
- £10 a day fines for up to 90 days if you don’t file by April 30th
- a £300 fine (or 5% of the tax you owe – whichever is the greater number) if you still don’t file your tax return for 90 days after April 30th
- an additional £300 (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year
- additional penalties if HMRC believes you are intentionally delaying your filing - this may include a fine of up to 100% of the amount of tax you owe
Remember that if you were to file late, you’d also need to pay the tax you owe and HMRC would issue additional penalties for late payment.
Summer may not be the traditional time to tackle your Self Assessment tax return but getting it sorted in plenty of time is a great way to give yourself an early gift of a stress-free Christmas and new year!
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