Benefits of Early Tax Return Filing

Completing a tax return can be a cumbersome, time consuming and often a stressful experience, especially when you file it at the last-minute. HMRC is also putting their best efforts and reminding the taxpayers to file their online tax returns as early as possible to avoid the last-minute rush and avoid paying the fines and penalties.

• Receive your tax refund sooner
• Tax planning opportunities
• Avoid late filing penalties
• More time for preparation
• More time to focus on your business
• Calculate your tax bill for Cash Flow Planning
• Contacting HMRC

Due to various reasons, even in normal circumstances, it is recommended that a taxpayer should file their tax returns early or much before the deadline, which becomes even more important in this unprecedented time of coronavirus pandemic. Look at some of the benefits of filing your tax returns early –

1. Receive your tax refund sooner

   – To get your tax refund earlier in your bank account, it is your duty to file your tax returns much before the deadline. If you know that you have overpaid the tax and refund is due, start preparing for your tax return and get your tax refund from HMRC as early as possible. HMRC don’t wait until 31st January for processing of tax refunds. As early as you will pay the due taxes, early the refunds will be processed by HMRC and get credited into your bank account.

2. Tax planning opportunities

   – In this time of coronavirus pandemic, planning is of utmost importance to avoid any financial shock which may take place in future. Hence, it would be better to plan your taxes early and save yourself from drastic future consequences. It can only possible if you exactly know how much tax you need to pay in the current year, and then start planning of your tax returns for the next year much in advance.

Also See: High Net worth Tax Planning for Individuals in UK

3. Avoid late filing penalties

   – During this time of coronavirus outbreak, taxpayers should save much of their money for present and future rather than losing it in paying fines and penalties to HMRC. One day late payment and you are fined with £100, which can be even more costly if it gets more delayed. Filing on time or even much before the deadline not only save much of your money but also protect you from fines and penalties.

4. More time for preparation

   – The more time you will give yourself in collecting information needed in the preparation of your tax returns, the better position you will be in. Allotting more time to the preparation of tax return can help in reducing the risk of errors, which can prove you costly, resulting in paying more tax and may even result in a resubmission of the tax return.

5. More time to focus on your business

   – Businesses pay most of their attention in the preparation of tax returns and reducing their tax liabilities. In this unprecedented time of coronavirus outbreak, many businesses have impacted due to adverse effects of Covid-19, hence the focus should be more on getting business back on track rather than the filing of tax returns. If you file your tax returns earlier, you will get more time to focus on your tasks, which are high on importance and require urgent attention.

6. Calculate your tax bill for Cash Flow Planning

   – Many businesses are currently engaged in cash flow planning to forecast their short/medium term cash needs but one of the biggest expenses they need to pay before the end of the tax year is their tax bills. Once you know the exact amount of your tax bill, it would be easy for you to plan effectively for how you need to pay it – be it through bank funding or preparation to engage with HMRC for a phased payment arrangement.

Also See: Why every business should have a cash flow forecast & how to build one?

7. Contacting HMRC

   – Contacting HMRC can be more difficult at times when the tax return deadline is around the corner. Avoiding tax affairs till the last month just for communicating with HMRC department can make your position more problematic.

   Hence, if you are due a tax refund, you may have to face a longer turnaround time in case you file return during the peak times.

How can DNS Accountants Help?

DNS accountants can help you file your tax returns early and much before the deadline without any hassle. We will calculate your tax liability and complete your tax return early so that you can plan your taxes with us much in advance for the next year too.

Also See: Paying Employee’s Relocation Costs without Creating a Tax Liability

In case you are having any query or want specialist advice on "Early filing of tax returns", kindly call us on 03330886686, or you can also e-mail us at enquiry@dnsaccountants.co.uk

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.