Paper vs Online Tax Returns: What is the Best Choice for You?
Completing the self-assessment tax return may certainly be a challenging task, but it needs to be completed accurately. You have two main options: the traditional paper form or using HMRC’s online portal. With over 97% of people now filing online, it is clear that many find the digital route easier. Let’s dive into why that is the case and help you figure out which option works best for you.
Who Needs to File a Tax Return?
Before diving into the “how,” it is important to figure out whether you even need to file a tax return in the first place. Not everyone has to, so if you are unsure, here is a quick checklist to help. You will likely need to file a return if you have met any of the following criteria in the last tax year:
- Total taxable income of more than £150,000
- A sole trader who made over £1,000 (before tax relief)
- A company director (but not if it is a non-profit organisation)
- Paid the high-income child benefit charge
- A partner in a business partnership
- Have untaxed income from sources like rental properties or savings
- Have foreign income
Still not sure? The Government’s website can help you check if you need to file.
Key Deadlines You Do Not Want to Miss
Missing tax deadlines can lead to penalties and interest on late payments. The following are some important dates to remember:
- 5th October: Register for self-assessment for the previous tax year
- 31st October: Submit paper returns
- 31st January: Submit online returns
- 31st January: Pay the tax bill for the previous tax year
Comparing Online and Paper Returns
1. Accuracy
One of the biggest advantages of the online tax system is the accuracy it offers. The online portal automatically performs calculations and highlights missing information, reducing the chance of errors.
However, using the paper return requires calculations to be made manually, raising the chances of errors. This may result in penalties and fines from the HMRC.
2. Time Pressure
A key difference between online and paper returns is the deadline. For paper returns, the filing can be done up to 31st October, which means you will have less time to compile your reports. However, online tax returns extend the period by an additional three months with a deadline of 31st January. This extra time gives you more flexibility and reduces the stress of rushing to meet deadlines.
3. Ease and Use of Convenience
Filing your tax return online is not only faster but also more convenient. HMRC’s system allows some fields to be automatically filled in, and guidance is available to help you through the process. Additionally, online returns usually take less time than paper returns, so you are likely to receive any refunds earlier.
Paper returns can, however, take longer to complete since they require the use of postal services for delivery. This is another reason why HMRC is trying to promote digital filing through the Making Tax Digital (MTD) scheme.
4. Security
Online filing is more secure. HMRC’s portal uses encryption, multi-factor authentication, and automatic timeouts to protect personal information. Filing through the post, however, can result in documents being lost or intercepted.
5. Environmental Impact
If you are environmentally conscious, filing online is the way to go. Digital filings lower the impact on the environment by reducing paper usage. Conversely, paper filing leads to more waste and additional resources for printing and mailing.
Making Your Decision
Determining when to file a paper or online tax return depends on several factors, including technological literacy, deadlines, and security. Filing online is generally faster, easier, and less likely to lead to errors. However, if you prefer a more traditional approach or do not have reliable internet access, paper returns are still an option.
Conclusion
Many people are currently filing an online tax return. It is a less stressful process because there are fewer chances for errors, and the due dates are considerably longer. This explains why most UK taxpayers now prefer this method. For additional details, please visit the HMRC website.
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