File your income tax return early and plan ahead with confidence

Self-employed individuals should file their income tax returns as early as possible so they know where they stand with the taxman, advises Kingston Smith LLP.

By now, individuals who usually submit a tax return should have received a notice from HM Revenue & Customs asking them to complete a return for the 2008-09 tax year. “If you are self employed, it is important that you know what your tax liabilities are so that you can organise your finances in these difficult trading conditions,” says Andrew Shaw, a tax partner at the top 20 accountancy firm.

“In the past, individuals may have been inclined to wait until nearer the tax deadline dates before submitting a return. However, filing a return as soon as possible can provide a double benefit. First, the tax owed will be recalculated, which means your second payment on account – due on 31 July – will be based on what you actually owe rather than what you paid the preceding tax year, which may have been substantially more.

“Of course, if you expect your overall income for the current year to be significantly lower than the previous year, you can ask for your second payment on account to be adjusted,” continues Andrew. “But by filing your tax return early, the second benefit is that you know exactly what you owe for the next 12 months or so. There will be no danger of underpayment, which would be subject to interest, surcharges and – in cases of extreme underpayment – penalties, and you can plan your finances accordingly.”

This principle applies to any taxpayer who is within the payments on account regime.

For further information, contact:

Andrew Shaw is a tax partner at Kingston Smith LLP
Tel: 020 7566 3807
Email: ashaw@kingstonsmith.co.uk

PR enquiries:

Layisha Laypang
Tel: 020 7566 3574
Email: llaypang@kingstonsmith.co.uk