Why file a tax return early?
It might not seem particularly tempting to file a tax return early as you're probably already bombarded with a million other things to do.
But that doesn't mean it won't be worth your while, as filing a tax return ahead of the deadline helps you avoid a number of obstacles and leaves you with more time to manage unforeseen complications.
According to HM Revenue and Customs, paper tax returns must be filed by October 31st, while online returns must be completed by January 31st.
If you want HMRC to assist in the calculation of tax due, then it's paramount that you issue your return well ahead of schedule.
This gives the tax office adequate time to deal with your request, but be prepared to provide a range of relative information to help their calculations.
When you sit down to file out that ever-important document, it's vital you jot down all the details in full.
If you sit down to do it because you're in a rush to get the return in to meet the deadline, then there is a higher risk you will make a mistake on the document.
Needless to say, if you make an error on a tax return that you have submitted early, at least you have more than enough time to rectify the mistake.
Another reason for getting ahead and issuing that tax return early is that HMRC will calculate any refunds you might be entitled to upon receipt of the document.
So not only will you get funds back sooner rather than later, but the tax office gets this out of the way when it has more time on its hands.
Filing a tax return in the final weeks of the deadline means you are likely to face slow responses as the office is handling a high volume of documents.
By submitting your tax return early, you're also giving yourself more time to manage your budget, since you will know sooner if there are any outstanding tax liabilities.
You then get a head start on your savings as you're up to speed on your tax obligations for the next year.
If you discover that you have a tax liability of less than £3,000 and you have submitted your return by December 30th, then this fee can be paid through your tax code.
As such, you can pay it off either through your regular wages or have it deducted from you pension each week or month.
Conversely, if you miss the deadline, you could face charges of up to £1,000 in penalties.
HMRC has an automatic system for penalising those who submit their tax returns late, and if it's more than three months late, daily levies of £10 are made.
The longer your tax return is left to be filed after the deadline, the more extreme the penalty will be.
The automatic system means that late tax returns will be charged £100, so you have little chance to avoid the fee.
With HMRC swapped in returns at the end of the tax year, your best bet for avoiding fines and overcoming tax liabilities, as well as receiving tax refunds, is by staying ahead of the average taxpayer and filing your return early.
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Published on: June 11, 2012
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