Self Assessment - why file your 19/20 tax return NOW? Why not just leave it?
The advantages of filing your 19/20 tax return now.
With the 19/20 tax year now over, (and probably not that long since you submitted your 18/19 tax return)…….why are we even talking about filing your 19/20 return at this time?
We’ve asked Mike Parkes, our Self Assessment expert, from GoSimpleTax to explain the benefits of filing early below:
Manage your cashflow
If you haven’t worked out your tax bill for 19/20, then how are you going to be in a position to properly manage your budget this tax year? There’s nothing worse than an unexpectedly higher tax bill that you haven’t put anything aside for.
Know where you stand
Firstly, if you do have something to pay, which most of you will, filing early just gives you that visibility over what you owe. Effectively, all you’re doing is giving yourself the heads-up to allow for better budgeting. Remember, your tax bill isn’t due until the 31st January 2021.
Pay through your tax code
Did you know, you can ask HMRC to collect any unpaid tax through your tax code, making things even more manageable.
You might be due a tax refund…
If you’ve paid too much tax in the previous year, HMRC will notify you, and will return what you’re owed within a few weeks. That’s cash in your hand right now.
It’s alright, I’ll wait……
Sadly, so many people get caught out. Despite being an annual occurrence, almost a million people missed the 2020’s Self Assessment tax return deadline. Over 700,000 submitted on deadline day. Part of the reason for this isn’t because the taxpayer has forgotten, but that they’ve underestimated the time it takes to register.
Filing just short of the deadline is a dangerous game. HMRC is under pressure, you may not have the documents you need, and it doesn’t exactly leave you much time to save for your tax bill.
Avoid the penalties
Finally, the obvious benefit of filing early is not having to pay a fine. Getting your Self Assessment tax return out of the way keeps you from facing any late-filing penalties, of which there are many.
Firstly, you’ll receive an instant £100 fine if you miss the 31st January deadline. For the next three months, if you haven’t yet filed, you’ll be charged £10 a day for up to 90 days. After that, you’ll face a £300 fine (or 5% of the tax you owe – whichever is greater).
Still not filed within a year? You’ll be issued another £300 fine or, again, 5% of the tax you owe if greater. At this point, HMRC may believe you’re intentionally delaying your filing. If they do, you’ll be penalised by an additional 100% of the owed tax.
Do yourself a big favour and file in April
Filing in April, on the other hand, steers you clear of any late-filing penalties. It also reduces the drag of devoting yourself to your taxes in January – which can harm your motivation and finances - at a time when you need to be totally focussed on earning money.
GoSimpleTax software is designed to make filing as straightforward as possible and ensure you avoid late-filing fines. Their solution is intuitive and easy to use, allowing for taxpayers at any level of experience to file without the assistance of an accountant. What’s more, their software will identify areas where tax liability can be reduced if you qualify for certain allowances. Interested? Take their free trial today – no credit card required!