Tax expert Amanda Swales from GoSimple discusses the pros and cons of submitting your Self Assessment tax return in different ways.
If you earn an income outside of PAYE, you’ll need to submit a Self Assessment return before the 31 January 2020. All income (including pension payments and dividends), expenditure and expenses (payments for which you can claim back money, like uniform/materials/tools) must all be noted down and sent to HMRC every year. Failure to fulfil this legal obligation will result in fines.
HMRC use the information in your Self Assessment return to conduct a calculation of the tax you’re liable to pay. Once upon a time, putting pen to paper and popping your form in the post was the most popular and practical way to submit a Self Assessment return. But in the modern climate, income and expenditure streams have become more diversified and complex, not to mention digitally-focused.
Nowadays, there are as many as four different Self Assessment options: paper returns, direct submission via HMRC, using an accountant, and tax software. Here, we take a closer look at them all:
Paper returns have shifted from the most utilised tax return method to perhaps the least popular of all. Over the next few years, paper submissions are actually going to be phased out entirely, but for the time being, sending a Self Assessment via post remains an option.
The deadline for paper returns is earlier than that for digital submissions: 31 October. Plus, doing it by hand is time-consuming and can be tricky without guidance. These two obstacles tend to deter people who are relatively new to Self Assessments.
However, those who’ve been submitting tax returns in paper form for decades find this route to be the most familiar and therefore comfortable. These are the people who the government hope to address through phasing out paper returns and introducing Making Tax Digital from 2019 onwards.
If you choose to go the paper route in the meantime, bear in mind that everything will need double-checking. It’s also important to create photocopies and obtain proof of postage of your completed documents before you send, just in case they get lost in the post.
- Familiar if you’re used to it
- Doesn’t require internet access
- Can be completed on your own terms
- Postage can cause problems
- Gets complicated quickly if you haven’t done it before
Direct submission via HMRC website
The deadline for online returns is the 31st January each year. One way to submit is by doing so directly through HMRC’s website.
To do this, you need register as a user on their website, then key in the necessary financial information about your business. Of course, you’ll need your receipts and statements handy just like with a paper submission. But submitting online won’t require any postage and is a much quicker process.
As many as 90% of people who need to complete a Self Assessment now choose to do so via HMRC. However, changes are looming. Over the course of the next few years, the gateway for HMRC to calculate your return will be taken down, with people required to switch to commercial software as part of the government’s Making Tax Digital initiative.
• Completed forms go straight to HMRC
• Easy and quick
• Plenty of support available online
• Due to be removed over the next few years, so it may not be worth familiarising yourself with the process
Online tax software
Submitting your Self Assessment through commercial software is set to emerge as the most prominent tax return process, as the government aims to streamline processes and encourage everyone to file tax returns online.
Self Assessment returns via software are due by 31 January and go straight to HMRC. Everyone who opts to submit their tax return in this manner will need to obtain their own Unique Taxpayer Reference number (UTR) from HMRC (this can be done via registration on their website). From this point forth, the UTR will appear on the SA100 form of your tax return.
There are various types of tax software available, with some proving more helpful than others. The stickiest part of submitting tax through commercial systems is the process of finding software that suits you and your preferences.
Once you’ve tracked down your perfect match, however, digital tax returns become extremely simple – without the need to fork out fees for postage or professional advice. Some tax software also arrives with tips and guidance built-in – offering you the kind of useful advice you might hear from an accountant.
- Easy to use
- Built-in support
- Completed forms go straight to HMRC
- Need to find the right software for your preferences/needs
If tax returns leave you confused and tense, you might turn to an accountant. These financial professionals point out where you might have opportunities to save money on tax and suggest extra expenses you may not have thought about. They will then complete and submit your Self Assessment on your behalf.
Not everyone has the confidence to complete a Self Assessment online by themselves, preferring to take a “better safe than sorry” style approach when it comes to communicating with the taxman. To do so costs, on average, £240 per submission.
It’s true that good accountants are often worth the money – helping you to stay on top of your books to keep them neat and tidy. However, some of these financial experts may not have the time or resources to help with your specific issues. Like choosing tax software, it’s a case of finding the right fit.
- Knowledgeable and practical tax advice
- Peace of mind knowing everything is taken care of professionally
- Can take a while to find the right accountant for you
- Often expensive
Things to keep in mind
No matter how you choose to submit your tax return, you can benefit from keeping track of your incomings and outgoings throughout the year with digital bookkeeping. This way, you’ll be able to complete your Self Assessment in plenty of time before the deadline and avoid the stress that comes with last-minute submissions.
Remember – there’s nothing to be gained by leaving your Self Assessment return until the eleventh hour. Stay on top of things from the earliest possible point, and use the time you have now to find the best submission method for you.