Making Your Tax Return Now

Avoid the last minute rush

Actually, there’s a third certainty in life beyond death and taxes – articles and news stories about people ‘clamouring’ to get their tax return in on the deadline as it looms. It’s both simple and wise to avoid being one of those people frantically stacking up piles of paper, receipts and invoices as the clock ticks down.

Get your return in early and there is plenty of time to deal with errors later – and filing incorrectly can lead to penalty fines. You’ll also find that more tax professionals and wealth management experts are available to work on your accounts and returns if you avoid the last minute – that tends to be their busiest period.

Early return doesn’t mean early payment

Filing your tax return well before the official deadline doesn’t mean you need to pay what you owe HMRC immediately. No matter the sum, it’s better off earning interest for you. The payment deadlines don’t shift, so you can choose to pay your money early too, or just sit on it until it’s time to pay up.

It’s always a good idea to earmark your tax money once you’ve filed your return, if you haven’t done so already. Stick it away in a separate account that will earn as much interest as possible, but safe from you accidentally dipping into it.

Get your rebate faster

While you don’t have to pay until the deadline, one advantage of filing your return easier is that, if you are due a rebate, you’ll get that faster. As refunds can run into many thousands of pounds if you earned a significant amount more in a previous tax year, be aware that HMRC pays out promptly, and doesn’t wait until past the final payment deadline.

You’re likely to get your rebate faster if you avoid filing around the January rush when they’re busiest. It’s also a good idea to check for you – or your tax accountant – to check your tax code to make sure you’re not over or underpaying. Recent research has shown that many people are overpaying due to incorrect tax coding.

Stay on top of planning

By completing your return early, you can get a clear picture not just of your tax situation, but also your financial health as a whole. That frees you up to take a look at the bigger picture and make informed decisions about investments, budgeting pension contributions and more.

This extra time can also be used to implement tax planning strategies. If you forecast that your next year of earnings and thus your tax burden may be similar, you can look at ways of maximising your allowance. This could be through paying into your pension and getting tax relief, making a charitable donation or investing in an ISA.

Don’t underestimate peace of mind

Not every reason for filing your tax return nice and early is a financial one. There’s a lot to be said for the mental benefits of having your paperwork filed well before the deadline. It cuts down on the stress of making sure you have everything in order, there’s no scrabbling around in drawers or cabinets for lost receipts or documents. You can file your return and relax until it’s time to do it all over again.

The stress of a last-minute return can also mean it’s easy to miss something. Have you overlooked an expense that could cut your payment down significantly? Have you got all the paperwork that means HMRC won’t have to clarify anything with you? The earlier you gather your paperwork, the better the chance you have of maximising all allowed deductions to reduce your tax liability.