Why You Should Do Your Tax Return Sooner Rather Than Later

The next tax deadline might seem far away, but it often comes around sooner than expected. Here’s why it would benefit you to start to prepare your tax information in advance of the January 2022 deadline.

A calculator is sitting on top of some tax return papers with a pen and a mug of coffee nearby. — Why You Should Do Your Tax Return Sooner Rather Than Later

Now that we seem to be emerging from the worst aspects of COVID disruption, and business support from the government withdraws, it’s important to start thinking ahead when it comes to tax payments.

The deadline for the 2020-21 tax return isn’t until next January, but it’s always beneficial to fill your information in sooner rather than later.

What is the 2020-21 filing deadline?

Tax returns need to be filed online on or before 31 January 2022. But the sooner you process your income and gains for 2020-21, the more time your accountant will have to consider tax planning options and forecast your tax payments for 2022.

This might include reducing payments on account for next year if they can establish that your income for the current year, 2021-22, is likely to be lower than earnings in 2020-21.

What planning options are there for 2020-21?

Planning options might include:

Utilising losses brought forward from previous years.
Carrying back charitable donations.
Reducing payments on account.
Using tax-privileged investments such as Enterprise Investment Schemes to reduce your tax.

Knowing what your tax position is for 2020-21 may also allow your accountant to estimate similar figures for 2021-22 and consider planning options that you could action before 6 April 2022. For example:

Maximising pension contributions
Re-considering income withdrawal options if you run your own limited company.

Help us to help you

Efforts to help you minimise your tax liabilities and give you as much time as possible to prepare and fund future tax payments does take time. The sooner your accountant can crunch the numbers the sooner they can provide you with useful advice.

At Chesterton House, we are uniquely placed to provide the comprehensive advice that you need in this area. Speak to our Team to get things underway, or drop us a line here.