QUESTION: I normally leave completing and filing my tax return to January each year but I have just received a reminder letter from my accountant to get my information into him to allow him to prepare it before Christmas. It would be good to get this out of the road but do I have to pay my tax earlier if I submit my return before the January 31 deadline?
ANSWER: Whilst the deadline for submitting your tax return for the year ended April 5 this year is January 31 2022, HMRC are always very busy during this time, so getting your affairs in order early will greatly help you and give you greater peace of mind.
There are many reasons why taxpayers should complete and file their tax return before the January rush and we highlight below some of the key benefits of getting your tax return submitted early.
If your circumstances have changed and you’re due a tax refund, the earlier you submit the tax return, the earlier HMRC will pay you this refund.
There’s nothing worse than finally filing your tax return and finding you’ve got a very small amount of time to find the cash to pay it as you’ve missed the opportunity to budget to set aside money for your tax bill. Remember filing your tax return early does not change the payment deadline of January 31! The consequences of this could be that you don't have the money and have to arrange a time to pay with HMRC. Planning to pay your taxes will mean that you have the time to make better-informed decisions without the stress and need to act quickly.
If you’ve recently been through the mortgage process, you’ll be only too familiar with the mortgage broker or bank asking that question you dread. “Please can you provide your most recent tax return information?”
Only to realise that you haven’t filed this yet. What then follows is a mad rush for the work to be completed and lots of stress to boot! Especially with the last 18 months that we’ve had, banks will be requiring more recent information when looking at lending decisions.
Working on your tax return early affords you a unique opportunity to review your personal affairs to ensure that you make use of all available reliefs and allowances. It will help you to identify potential ways to save tax as early as the 2021/22 tax year.
Avoid the surge in demand for HMRC support in January, this will make it so much easier to contact HMRC for access to your gateway account, to register for self-assessment, query your tax return and also ensure earlier processing of the refunds mentioned above.
The satisfaction and relief that comes with filing your tax return and understanding your tax liability should not be overlooked. Don't ruin your Christmas with thoughts of filing your tax return.
Tax has become an ever-changing and increasingly complex field and unless your accountant has enough time to review your affairs, you may be losing valuable reliefs you are eligible for. Therefore, you could end up paying too much tax without realising it.
Every year we help more and more of our clients file their tax returns earlier in the year, with the most common reaction being, why have I not done this before? We know that filing your tax return is not exciting for you, however, procrastinating means that you always have the thought of another task to be completed. Let us have the information and we will do the hard work for you, ticking an item off the ever-growing to-do list!
:: Malachy McLernon (m. mclernon@pkffpm.com) is a director of PKF-FPM (pkffpm. com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
