Tax Return Time!
We are now out of the 2015/16 personal tax year and we are into the 2016/17 one. Your employer should shortly be giving you your P60 forms detailing all your income tax and national insurance contributions for the year ended 5 April 2016 through your employment.
Those of us that have income that falls outside of the PAYE system and is not taxed at source – dividends, rental income, etc – also need to complete a self-assessment tax return by January 31 2017. But we don’t need to – AND SHOULD NOT – leave it until then!
The following are our Top 5 reasons why you should file your tax return with HMRC as soon as you can:
- No nasty surprises – the sooner you get it done, the sooner you will know how much you have to pay so you can plan your cash flow accordingly. File it now and you have nearly 9 months to plan your payments and savings, but leave it until the January deadline and you could be left with a big surprise bill at the worst possible time right after Christmas – and nobody wants that.
- Get your refund sooner – if you have overpaid tax during the year for whatever reason, then the sooner you file your return, the sooner you will get your refund paid back to you. It’s better to have it in your account collecting interest than in those of HMRC.
- Be aware of payments on account – these “extra” payments catch many people by surprise and forewarned is forearmed. If you have tax due of £10k from 2015/16 for self assessment then HMRC assume that you will have the same due for 2016/17. By 31st January 2017 they will want the £10k PLUS £5k payment on account for the next tax year, so a big bill of £15k. The sooner you know about that the easier it is to plan for it.
- Fewer errors – if you have more time to do it you are less likely to make errors by forgetting to include relevant information – and should you need to make a correction you still have time to file a revised return without getting the late filing penalties HMRC impose.
- HMRC and accountants will be busy in January – it’s the same every year with people sending things in last minute – and it is unlikely to change any time soon. Getting it in sooner will mean that both your accountant and HMRC will have more time to spend with you and answer any questions you may have than if it is on 31st January 2017.
So get it done asap!