While the deadline for filing your Self Assessment is still a long way off on 31st January, there are compelling reasons to take this task off your plate early - five of them, in fact! If cashflow’s feeling tight, you might be tempted to hang back and pay your tax bill at the last minute, but this might not be the best option for you and your business.
Here’s why you should consider filing early.
Reduce your stress levels
Small business owners often have a to-do list as long as their arm. 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 (though it doesn’t have to be with FreeAgent’s help), but it’ll feel so worth it when you can breathe a sigh of relief for another year.
Make fewer errors
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 get your records in order and you won’t find yourself in a sticky situation trying to fix mistakes later on. Of course, if you do make a mistake before the deadline, there are ways to fix a Self Assessment return after filing it.
Get 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 7.75% by HMRC.
Free up your 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.
Ready to discover simpler Self Assessment? Only FreeAgent lets small businesses and accountants file directly to HMRC. Get your 30-day free trial of FreeAgent’s award-winning accounting software, designed to save your business time on tax returns and much more.
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.