Why Early Crypto Tax Return Submission Pays Off:
The deadline for submitting crypto tax return fy2022-23 online and paying taxes is January 31, 2024. However, there’s no need to wait until the last minute to file your Self-Assessment tax return.
Good reasons to file your tax return early!
HM Revenue & Customs (HMRC) typically sends reminders to taxpayers around this time of year, but many people still postpone the task until the festive season. Unfortunately, this leaves little time to complete and pay any taxes owed before the deadline, and it’s easy to get side-tracked by holiday celebrations. As a result, the deadline day is usually the busiest day for filing, and many people end up paying millions in fines for filing late.
While it’s natural to procrastinate on tax returns, there are plenty of benefits to submitting them early in the year. Here are 10 top tips on why it pays to file your crypto tax return fy2022-23 early and beat the rush:
- You won’t have to pay tax earlier
Even if you file your tax return early with HMRC, you are only obliged to pay any tax liability by the normal due dates:
• 31st January 2024 (balance and the first payment on account- if applicable);
• 31st July 2024 (second payment on account- if applicable).
2. But refunds will be earlier
If you file your crypto tax return fy2022-23 before the filing deadline, you should receive any tax refund you are due fairly soon after you’ve submitted it; HMRC do not wait until 31st January to pay you. Therefore, if you suspect you have overpaid tax and are due a refund, you should really prepare your tax return as soon as possible so that you can get the cash earning interest in your bank account; not HMRC’s!
3. Could be good for cashflow
Filing your tax return and calculating any tax liability arising, allows you the time to start saving for the bill and to manage your cash flow. If you pay your tax bill late, HMRC will charge you interest and possibly even late payment penalties.
The other benefit of filing early is that if your tax liability is under £3,000 and you submit your tax return by 30th December 2023, you can opt to have your tax liability collected through your tax code. This means it will simply be deducted from say your wages or pension each week/ month.
4. Amendments to your tax return
If you make a mistake on your tax return, you normally have 12 months from 31st January after the end of the tax year to correct it. So the earlier you submit your return, the longer the window of opportunity is to make any amendments to it.
5. Give yourself more time to prepare and avoid last minute stress
Having plenty of time to prepare your return reduces the risk of errors being made, because you aren’t rushing to get it finished. It also allows time for transaction details from exchanges /wallets to be collected and any other financial documents you may need to file the return and keep your portfolio up to date.
6. Contacting HM Revenue & Customs
Trying to get hold of HMRC can be pretty difficult at times due to staff cuts, but it’s even more difficult around the tax return deadline. Avoid leaving your tax affairs until December or later; just in case you need to speak with the department and can’t get through.
If you are due a tax refund, you’re also likely to experience a longer turnaround time if you file your return during their peak times.
7. Opportunity for Tax Planning
With the current tax year having begun on 6 April 2023, the clock is ticking, and it is important to utilise all the tax reliefs and allowances available before 5 April 2024. Starting this early helps, you to ensure minimise your tax liabilities and take advantage of any tax savings.
8. Tax inquiry window and tax investigation
The 12-month tax return enquiry window starts from the date you submit your tax return and NOT from the filing deadline. You can now file your tax return early and have certainty that 12 months later your tax return can be considered final and accepted.
9. Anti-Money Laundering Compliance
When you want to spend the crypto gains bank and lawyers want evidence for AML compliance. Submitting tax return early will help you to substantiate your income and gain.
10. You’ll avoid penalties.
Speaking of penalties, filing early will obviously give you time to address any problems and avoid HMRC’s late filing penalties.
• A £100 instant fine if you miss the January 31st deadline
• £10-per-day fines (for up to 90 days) if you haven’t filed by 30th April
• A £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed after another 90 days
• Another £300 fine (or 5% of the tax you owe – whichever is greater) if you still haven’t filed within a year
• Additional penalties – including up to 100% of owed tax – if HMRC believes you are intentionally delaying your filing.
These penalties are in addition to any penalties for paying your tax late.
We take the pain out of Self Assessments
Completing a Self-Assessment tax return can be a hassle, but with My Crypto Tax’s help, the process becomes painless. Our team of expert cryptocurrency accountants and tax advisors are available to assist you in filing your tax return early, ensuring that you know exactly how much tax you owe and by when. If you’re eligible for a tax refund, it’s in your best interest to receive it as soon as possible. We’ve already helped numerous cryptocurrency investors, entrepreneurs, and business owners with their tax returns and are ready to assist you too.
