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Advantages of filling in your tax return online

online tax return

You get a longer deadline if you fill in your return online

If you don’t want to complete a paper tax return, you can fill out your tax return online via the HMRC website. This is similar to filling in a paper return, but offers several advantages: 

1. An extended deadline

The most obvious advantage in filing online is the extended deadline – you have until 31 January 2012 to submit your return, giving you three extra months to gather information. 

If you file online and submit your tax return by 30 December, and provided the tax you owe is less than £2,000, you can opt for this to be collected through PAYE.

2. Automatic tax calculation and faster repayment 

Apart from the longer deadline, the two main advantages of filing your tax return online are that your tax is calculated automatically as you fill in the tax return, and you get a faster repayment if HMRC owes you money. 

3. Instant confirmation

Once you’ve submitted your tax return online, you’ll receive an on-screen confirmation message, together with a reference number. 

This may give you greater peace of mind than entrusting your paper tax return to the postal system.

4. Personalised forms

The tax return computer program reacts to the answers you give as you fill it in, for example removing irrelevant sections of the return. If you fill in your tax return on paper, there are likely to be sections you have to miss out deliberately - whereas these will simply 'disappear' should you decide to file online.

HMRC's system will also pre-fill your online tax return with information already held on you, such as your address and National Insurance number. 

When filing online you can also save your tax return at any time, coming back to it later if you don’t have time to fill in everything in one sitting. If you make an obvious mistake when filling in your return online, HMRC's software should also highlight this.

For further advice on how to fill in the self-assessment form online buy a copy the Tax Handbook 2011/12.

Registering for the online tax return

If you haven’t filed online before you need to register to do so.

To register, visit the HMRC website. Click on the ‘Self assessment’ option under the 'do it online’ heading. If you’re a new user, click on the ‘Register’ button, then select ‘Individual’, followed by ‘Self Assessment (SA)’.

You’ll receive a user ID and activation Pin by post, which allow you to activate your account. They can take up to seven days to arrive, so you need to make sure you register well in advance of the 31 January deadline.

Once you have received your user ID and Pin, you must activate your online HRMC account within 28 days of the date shown on the letter sent to you - otherwise the Pin will expire and you'll need to request another.

HMRC’s online service

HMRC produces its own online software which allows users to file the main Self assessment tax return (SA100), and a number of supplementary forms including:

  • Employment;
  • Self-employment;
  • Individual partnership – to report your share of a partnership's profit or loss;
  • Land and property;
  • Capital gains;
  • Foreign income.

Logging on to your online tax return

Once you have logged on to your online tax return, there are five steps to follow:

  • Check your personal details;
  • Tailor the return – choose to fill in all the sections that fit your circumstances;
  • Fill in the figures on your return. The online program includes handy reminders about where you can find the information to fill in the current section (e.g. your P11D, P60 or payslips);
  • Check the return – make sure everything is correct and complete;
  • Submit your return. When you do, you will get an on-screen confirmation and code number.

Visit the HMRC website for a demonstration of the online tax return filing process.

Switching back to paper tax returns

Once you’ve had a look at the online return, you might decide you’d rather fill in a paper tax return after all. If you do, call HMRC on 0845 900 0404 and ask for a paper return. Don’t forget though – you’ll need to complete and submit it by 31 October 2011.

What’s not covered online

Do watch out – HMRC’s online service may not include all the supplementary pages you need. 

Also, while it does cover the personal tax returns of members of a partnership, it does not cover the partnership return itself. Partnerships will therefore have to submit a paper return by 31 October, or invest in a commercial tax software program which does cover partnership returns.

Commercial tax software programs

There are many commercial software packages available to help you complete your tax return, such as Sage Taxation, TaxCalc or Ftax. HMRC has checked several of these and publishes a list of compatible software. 

Supplementary pages available through software packages include:

  • Employment;
  • Self-employment;
  • Individual partnership;
  • Land and property;
  • Share schemes;
  • Foreign income;
  • Trust income;
  • Capital gains;
  • Non-residence;
  • Minister of religion;
  • Lloyd's underwriters.

However, HMRC’s helpdesk does not cover support for these packages.

If your tax affairs are not straightforward or the standard online self-assessment process won't work for you, you may want to seek the help of a specialist tax adviser to help you fill in the correct forms. You can read more about finding one on the Choosing a tax adviser page of this guide. 

For more information if you're self-employed, see our book Working for Yourself.