We are now a couple of weeks into the new tax year, the software has been updated for the new tax rates and the team here at Perrys are chomping at the bit to start preparing 2015/2016 tax returns.
Very interesting Simon, I hear you say, but why would we submit our tax returns in April when they don’t need to be filed until the end of January 2017?
Well, whilst it’s true that the filing deadline for submission of electronic tax returns is 31st January 2017 (paper returns need to be submitted by 31st October 2016) there are several advantages of filing returns early.
For a start, the sooner it’s done, the sooner you can forget about it for another year. Why not avoid that January stress and make your accountant very happy in the process?
Ok, so if making your accountant happy isn’t high on your list of priorities, then perhaps you are due a repayment and the sooner the return is submitted, the sooner HM Revenue & Customs will refund you. Don’t worry though, it doesn’t work the other way around, so submitting the return early doesn’t result in you paying tax any sooner.
On the other hand, knowing what your tax liability will be as soon as possible gives you more time to plan for this and to start saving.
Another advantage in preparing tax returns early is that if this is done before the second payment on account in July is due, and if profits have decreased, it may be possible to reduce the payment in July.
Finally, the earlier that tax returns are prepared, the more likely it is that time and attention can be given to tax planning and hopefully saving you some tax.
So when those reminders from your accountant hit the doormat, give some thought to making a new (tax) year resolution and get it done early!
Article written by Simon Hayden