Tax Returns and getting them in early
Most people operating a business in the UK, together with other specific taxpayers, are obliged to file tax returns with HMRC. While it can be tempting to put off completing a tax return until the last second, this is not good practice. Taxpayers should ideally complete and submit their tax return early. Below is a guide to the deadlines you need to be aware of and the benefits offered by filing your tax return early.
New Sources of Income
Deadline: 5 October 2017
If you have received income from any new source during the previous tax year, which covers the period 6 April 2016 – 5 April 2017, these need to be declared by 5 October 2017. Aside from new business ventures, new sources of income may include:
- Income from self-employment trading
- Income from partnership trading
- Rental income from a UK property
- Rental income from a foreign property
- Interest received
- Foreign dividends
Paper Tax Returns
Deadline: 31 October 2017
If you plan to file a paper tax return, this must be submitted to HMRC by 31 October 2017. The only exception to this is if you have registered a new business with HMRC after 31st July 2017. If this is the case, you will be issued with a separate notice which will contain a later deadline. If you fail to file your paper returns, you may be subject to a financial penalty.
Deadline: 31 December 2017
If you have underpaid tax during the year, this can be coded so it can be collected in the next tax year, rather than being paid in a lump sum on 31 January 2018. The deadline for submitting a tax return if there is an underpayment to be coded is 31 December 2017
The Benefits of Filing Tax Returns Early
Submitting a tax return before the deadline creates a time frame in which you can assess your tax liability. This time could prove vital as you can create a plan for how and when payments will be made. If you need to move money, sell assets or reconfigure your business to meet your tax liability, you will have the time required to do so.
On the other hand, if you are in a position where HMRC owes you a refund, Submitting your tax return early will mean that you will receive the refund earlier than if you had waited until the deadline.
Making Tax Digital
Earlier this year, HMRC completed a consultation Making Tax Digital, which outlines plans to increase the drive towards online tax returns, with businesses and individuals using personal tax accounts to file digital tax records.
If you would like assistance with your digital tax returns, BHP can help to guide you so that you file the correct amount of tax at the correct time.