Is it fair to say that tax isn't your strongest suit? It's a common complaint. Business owners often aren't sure which aspects of their tax responsibilities they can handle themselves, and when they're better off calling in the professionals.
The self assessment return is a classic case in point. Technically, you can do it yourself - but some would argue that leaving it with an accountant is a wiser choice.
These days, however, clever tech can help you confidently handle your obligations yourself - so a financial professional may not be the best use of your money. Here we explain why.
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How self assessment works
First things first - currently, self assessment tax returns must be completed once a year by either 31 October (for paper returns) or 31 January (online). Your return declares how much taxable income you've earned in that financial year, and names any expenses or reliefs you may be eligible to claim.
Under the Making Tax Digital initiative, which is currently being phased in, annual returns will be replaced by quarterly updates. You'll need an online HMRC account for this purpose.
Tax returns require close attention to detail. You must provide accurate dates, figures, and marital or special relief statuses. Whatever you declare, you should be prepared to back up your claims with evidence if requested by HMRC.
Submitting inaccurate information carries a financial penalty, as does missing your filing deadline - and fines will increase the longer you put off rectifying the situation.
How a tax accountant can help
As you might guess, business accountants bring significant expertise to the table. These are people who deal with numbers every day, so they're very good at ensuring all your figures add up. But more than that, they know the law: what you're entitled to, and how your liabilities might be reduced.
The fee for an accountant to complete your self assessment for you is typically £250 for a reputable firm, although some will charge less for a very basic service.
Using an accountant saves stress on your part, but, perhaps more importantly, it also saves time. £250 may feel quite reasonable when you consider the several hours you might otherwise spend handling your self assessment return yourself.
Why accountants are not the only option
However justifiable the accountant's fee, however, small businesses or freelancers in particular may simply not have the cash to spare. Added to this, human error is still a risk. As good as any accountant is, they can miss the mark at some point in their career. Your self assessment return may be the unfortunate victim of oversight - and you will be liable.
Usually, the importance of a tax return and the pressure to get figures exactly right, coupled with a lack of financial confidence, is what puts people off doing it themselves. But in truth, anyone can file an accurate tax return without professional help.
One alternative is smart tax software that adds your income and expenses up over the financial year. As long as you input your figures carefully, your calculations will be 100% error-free. These tools are very affordable, and reduce your tax return burden to a single click on deadline day.
Otherwise, you can always do your own return with the help of spreadsheets, calculators and good book-keeping. It's not as simple as using dedicated tax and accounting software, but it's certainly achievable if you're organised and have a head for figures.
Either way, remember that accountants are not a necessity when filing a self assessment. It's more about finding a solution that works for you.
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