Every self-employed business either submits paper tax returns in advance or files tax returns online after registering to file self-assessment tax returns online, which has several advantages.
Every self-employed business is required to register the business with HMRC within three months of starting the business. Following registration HMRC issues a unique taxpayer reference and sends out the annual self-assessment tax return. Self-assessment paper tax returns are submitted by October while further registration is required to file Inland Revenue self-assessment tax returns online.
Filing Paper Self Assessment Tax Return
Filing a paper self-assessment tax return is done by posting it to HMRC or handing it in at an HMRC enquiry centre to arrive by 31 October. Enquiry tax office addresses can be found on the HMRC website. The tax due can be paid after filing a paper self-assessment return, but remains due until the tax payment deadline of 31 January.
The printed paper tax return sent to HMRC must be identical in format to the official HMRC version of the paper return. Alternative copies of the paper Self-Assessment Tax Form are not accepted. Additional information can be sent if necessary and filed in the Additional Information section of the paper tax return, for example to support the notes.
Registering To File Self Assessment Tax Return Online
Before filing Self Assessment Tax Return online self employed business needs to register and activate the process which may take 7 to 10 days as the activation pin number is sent by post. To register go to the home page of the My Account Filing website and click on Self-Assessment in the Do it Online section. Click on Registration in the New User section of the HMRC Online Services page. Click on Individual on the next page and Self-Assessment on the subsequent page and then follow the online tax registration instructions.
When registering you will need to provide your post code or National Insurance number and your UTR, Unique Tax Payer Reference. The unique taxpayer reference would have been allocated when the business was first registered as self-employed and appears at the top of completed tax returns and also on any My Account Filing about your tax affairs.
After registration the Government Gateway posts the unique User ID and Activation PIN number which can be used to log in to the online account to complete the registration within the limit of 28 days for activation.
Advantages Filing Self Assessment Tax Return Online
HMRC encourages the filing of self-assessment tax returns online as it streamlines their administration and provides advantages for tax filing by self-employed businesses whereby online tax returns can be processed quicker than paper tax returns. The HMRC tax calculator instantly calculates National Insurance and Income Tax liability and also provides the option to pay that tax liability online instantly.
Filing self-assessment returns online also provides peace of mind as an email acknowledgement is received. HMRC does not issue receipts for paper returns. Online tax returns can be filed and both tax liability and payment history can be accessed and payments made if required to avoid late payment penalties.
A significant benefit of filing tax returns online is that there are an additional 3 months between the paper tax return deadline of October 31 and the online tax return deadline of January 31. This time interval can be used to review the self-assessment return being submitted to ensure accuracy. Reviewing financial accounts after completing tax forms and before submission can often jog the memory of tax deductible expenses that may have been misreported or forgotten, which can be deducted to reduce the final tax bill.
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