On the fourth day of Christmas…make the holidays less taxing – get your return in early!

Peter Young

Peter Young

Tax Partner

The tax return final submission date of 31 January 2017 is a deadline not a target - it is also the last day for paying 2015/16 tax liabilities without incurring late payment interest charges. So why not get your tax return out of the way before Christmas this year?

Not everyone has to submit a self-assessment tax return, but if HMRC asked you for a tax return, you will be fined if you forget. Also remember, it is up to you to tell HMRC if you have a new source of income or have made capital gains, for example on selling shares or property. 

If you are already in the self-assessment system you should act now if your tax return has not yet been submitted. Those tax papers cannot lie in a cupboard indefinitely and may be more difficult to find again come January. 

The benefits of submitting your return early

Sorting out your tax affairs now will make you feel better over Christmas. A surprisingly high number of people submit their tax returns online on Christmas Day, but do you really want to be one of them?

There are very good financial reasons too for doing your tax return early:

  • Employees submitting tax returns before 31 December can have their liabilities coded out over the following year so need not pay up on 31 January
  • You know what tax you have to pay on 31 January and can plan accordingly
  • Complex issues take time and expertise, whether calculating a pension annual allowance tax charge or reviewing if a profit is income or capital in nature
  • January is the busiest month for tax professionals – spare a thought for the long-suffering personal tax team burning the midnight oil in the office!

Scottish resident taxpayers now effectively pay part of their income tax over to the Scottish Government, although HMRC still administers the whole UK tax system. Scottish tax rates and bands may diverge from the rest of the UK as early as next April. If they do, HMRC will assume everyone with a Scottish postcode is a Scottish taxpayer and charge tax accordingly.

Last year George Osborne announced the end of the tax return, but the new digital taxation system is not going to be that simple. HMRC want businesses and landlords to submit quarterly business results online from 2018 onwards. They have also suggested taxpayers could volunteer to pay their self-assessment tax liabilities earlier than at present.

Need a hand?

If you need help completing your tax return, why not get in touch with one of our personal tax experts.