Readers who still need to file their 2014 self-assessment tax return may be asking themselves what’s the rush? After all, the deadline for filing the return is not until 31 January 2015: more than two months away.
In fact there are at least two good reasons why you should attend to your filing obligation in the next few weeks.
- If part of your earnings comes from self-employment, either as a sole trader or in partnership, your income from this source for the year to 5 April 2014 may create a significant tax payment on 31 January 2015. If your profit was higher in this year (to 5 April 2014) than in previous years, then it is likely that any payments on account you have made for 2013-14 will not be sufficient to cover all the tax that is due. Accordingly, on 31 January 2015 you will have to pay any shortfall together with a possible increased first payment on account for 2014-15.
If you leave your tax return filing until the last minute you will have no time to organise funds to pay tax due. The earlier you file your return after 5 April 2014, the more time you will have to source funding for your tax payment on 31 January next year.
- The second reason to file your tax return now is to avoid breaching a further deadline on 30 December 2014. If you file online before this date HMRC will allow you to pay off any arrears of tax for 2013-14 by adjusting your next year’s tax code. There are limits to the amount of unpaid tax you can clear in this way (presently £3,000), and you will need to have a source of income that is subject to PAYE and sufficiently high enough to support increased PAYE deductions to recover any outstanding tax.
Our advice, therefore, is to attend to your tax return filing without delay.