Why you should complete your tax return now!
There is no better time to complete your personal tax return.
Tempting as it is to finish the tax year by 'filing' your paperwork and receipts in a large envelope labelled 'January', there are many good reasons to file your Self Assessment tax return now, rather than letting the dust gather until Christmas.
Promptly completed tax returns can provide improved cashflow and will definitely enhance your ability to plan your tax affairs for the 2018/19 tax year. Not only this, you can sit back and enjoy the summertime, smug in the knowledge that the 'demon' will not be awaiting you in your filing cabinet when the nights draw in and leaves start to fall...
What will you gain from filing your tax return now?
Calculating your tax liability for 2017/18 soon will give you longer to plan to pay for any unpaid tax due by 31 January 2019. Not only this, if you are employed or in receipt of a pension and have underpaid tax by less than £2,000 your tax return must be submitted by 30 September 2018 in order to guarantee collection of the underpayment through your PAYE tax code in 2018/19.
Conversely, if you have overpaid tax for 2017/18 we can file your return and obtain you a refund sooner.
The actual tax liability for 2017/18 also forms the basis for payments on account in January and July 2019. Again, the earlier these amounts are known, the longer you will have to save for payments due.
If your Self Assessment tax liability for 2017/18 is lower than for 2016/17 we may be able to reduce the payment on account due in July to avoid you paying tax and obtaining a refund later. However, to do this we will need to prepare your return by about the middle of July.
Although most of the tax planning opportunities to reduce tax for 2017/18 have passed, there remains the ability to carry back charitable donations to the previous tax year in certain circumstances.
HMRC state on their website that ‘You can ask for Gift Aid donations to be treated as being paid in the previous tax year if you paid enough tax that year to cover both any Gift Aid gifts you made that year and the ones you want to backdate. Your request to carry back the donation must be made before or at the same time as you complete your Self Assessment tax return for the previous year but no later than the filing deadline for the tax return, which is 31 October if you file a paper tax return, or 31 January if you file online.’ What HMRC does not mention are the opportunities this facility provides, particularly to higher rate tax payers and those with income in excess of £100,000. Please contact us if you would like more information.
So as you can see, you might benefit from dealing with your 2017/18 tax return sooner rather than later! Our Personal Tax team can take care of your tax compliance for you and assist with your tax planning for the new 2018/19 tax year. Pop into our office if you'd like one of our handy Tax Cards which summarise all the rates and allowances for the current tax year.
We offer a free initial consultation for new clients.
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© New Forest Tax Accountants 2018.
The information in this communication does not constitute individual advice. New Forest Tax Accountants will not accept any responsibility for decisions taken or not taken on the basis of the information presented here. Before taking any action, including no action, always obtain independent, professional advice relevant to your own circumstances – preferably in writing. Any reference to legislation and tax is only based on published legislation and standards at the time this communication was published.