How to File a Tax Return Online

Making sure you file your tax return on time each year can still be a source of stress for many small business owners, but choosing to do so online can make the process much more straightforward and give you more time to ensure you’re providing the correct information. While it can seem daunting to switch to online filing, more than 10 million people submitted their 2020-21 returns in this way, more than in any other year. So, if you think online filing could be for you, read on to find out how it works.

Do I need to file a tax return? 

The first thing to check when you’re considering filing your tax return online is whether you need to file a return at all. If you were self-employed as a sole trader in the last tax year and earned more than £1,000, you must file a tax return. You must also file one if you were a partner in a business partnership or director of a limited company whose income was not taxed at source or if you think you’ll have extra tax to pay.

Even if your primary income is taxed at source, you may still need to file a return, for example, if you were paid more than £100,000 via a PAYE salary scheme or have any other untaxed income, such as from rent, commission or dividends.

If you’re unsure if you need to submit a return, HMRC offers a handy online tool to help you find out.

Tax return dates and deadlines 

If it’s confirmed that you need to file a return, the next step is to ensure you have the relevant key dates and deadlines in your diary.

For the last tax year, the deadline for registering for Self Assessment if you’re self-employed or a sole trader was 5 October 2021. The deadline for submitting your return online is 31 January each year, or 31 October if you choose to file a paper return.

It’s also worth noting that you may be required to make payments on account once you’ve completed your first tax return. This is in addition to any tax and national insurance due for the previous year. 

Payment on account involves making two payments towards your upcoming tax bill for the current tax year. The first deadline for paying this is midnight on 31 January, followed by the second payment on 31 July. You’ll be required to do this if your last self-assessment tax bill was more than £1,000.

How to register for online tax returns

In addition to giving you more time to file, completing your tax return online can be more accessible and can be done at any time of the day or night. You can even sign up for email alerts and online messages from HMRC designed to help you manage your tax affairs.

If you’ve never filed a tax return before, the first thing you’ll have to do is register for an online account with HMRC. You’ll need to create a Government Gateway user ID and password to do this. You’ll then be sent a Unique Tax Reference (UTR) number, which you’ll need to file a return. Note that it can take ten days to receive the letter with your UTR – 21 days if you’re located outside the UK – so be sure to factor that into your schedule.

If you’ve only filed paper returns in the past, you’ll already have a business tax account, so it’s a case of signing in and adding Self Assessment. You’ll need your Government Gateway user ID and password to sign in. You’ll also need your UTR, which will have been sent to you when you first registered to file a return. You’ll be able to find this on your previous returns and on any letters HMRC have sent you. If you still can’t find it, you can call HMRC.

As well as your UTR, you may need other documentation such as your National Insurance number and employer reference if you have one, your P60 and your P11D expenses or benefits, so have these to hand before you start.

How to file a tax return online

Once your account has been set up, you’re ready to file your first online return. Although you don’t have to complete your return in one go, it’s a good idea to have all the relevant information, such as bank statements, P60 and records of your income and expenses, to hand. You can save your entry and go back to it later if you need to.

The online self-assessment form follows the same format as the paper document, so you’ll begin by providing your details. You’ll then have to indicate where you received your income or gains, for example, self-employment or a company or partnership. It’s then a case of filling in the relevant follow-up questions about your source(s) of income.

The third section asks about income from bank or building society interest, pensions, share dividends and benefits before covering other information such as student loans, pension contributions, gifts, charitable donations, child benefit and marriage allowances. HMRC provides detailed information explaining how to fill in each section. They also offer numerous ways to get in touch if you have further queries.

Don’t send any receipts, accounts or other paperwork to HMRC supporting your self-assessment return unless HMRC asks for them. Even then, you should only send copies and keep the originals safe.

It’s also worth noting that even if you get an accountant to file your return, you’re responsible for the information provided, so take your time and double-check everything before you click submit. You should also keep records of all information used to complete your tax returns for up to five years after the 31 January deadline.

How to pay your tax 

Once all your information has been submitted, HMRC will tell you how much tax you owe. There are several methods available to pay your bill, including via online or telephone banking, CHAPS, debit or corporate credit card online, at your bank or building society, BACS, direct debit (if you have set one up with HMRC before), or by cheque through the post. You can no longer pay at the Post Office, however. Be sure to factor in enough time for payment to reach HMRC, however, especially if deadline day falls on a weekend.