We all know that UK taxpayers must file a self-assessment tax return each year, reporting their income and expenses. We also know that the self-assessment filing process has its own set of challenges. There are complexities involved in the tax rules, there are misconceptions built around the processes, and then there is the fear of missing the deadline. These challenges make an accountants for self assessment so important in the UK, but we’ll come to that later. We must begin by understanding the significance of self-assessment.
Accurate self-assessment is crucial for both individuals and the HMRC:
Correctly reporting income and expenses ensures that taxpayers pay the correct amount of tax avoiding penalties. More importantly, it helps individuals realise their financial standing, which in turn helps them plan for the future.
From the government’s perspective, accurate self-assessment is linked directly to funding public services, preventing tax evasion, and ensuring equitable contribution to society by all. Now the question is, if it’s self-assessment then what do you need an accountant for? We will answer that question and more in the course of this article. Before getting into that let’s cover some basics.
The basics of self-assessment – in a nutshell
In this section, we’ll go over some fundamentals of self-assessment filing. Here we have things that you already know and some things that you might have slight confusion about. We’ll move on to clear those up.
Types of Income and Gains Subject to Self-Assessment
When it comes to self-assessment accounting, hardly any stream of income can be ignored. HMRC’s guidelines regarding the matter are quite clear. The following are the income streams that you must consider while filing your taxes.
- Employment Income: Salaries, wages, and other benefits received from employment.
- Rental Income: Income from property rentals.
- Business Profits: Profits from self-employment or running a business.
- Investment Income: Income from investments, such as dividends, interest, and capital gains.
- Savings Income: Interest from savings accounts.
- Other Income: Pension income, taxable benefits, and other sources of income.
The Process of Filing a Self-Assessment Tax Return
This is a high-level breakdown of the self-assessment tax return process. You’d be well advised to seek professional help while going through these steps, especially if you have multiple sources of income.
- Gather Information: Collect all relevant financial information, such as income statements, receipts, and bank statements.
- Calculate Tax Liability: Use the appropriate tax calculation methods to determine your tax liability based on your income and expenses.
- Complete the Tax Return: Fill out the self-assessment tax return form, providing accurate information about your income, expenses, and tax calculations.
- Submit the Return: Submit the completed tax return to the HMRC (Her Majesty’s Revenue and Customs) by the deadline.
Deadlines for Filing and Paying Taxes
The following are the general deadlines for making self-assessment tax returns, these may change depending on circumstances.
The self-assessment tax return deadline for a year is usually 31 January of the following tax year.
While the payment deadline for smaller amounts may be due on 31 January, larger amounts may be payable in instalments throughout the year.
Common Errors in Self-Assessment
It’s quite common for individuals to make mistakes while filing their self-assessment returns. It takes a deep understanding of the tax laws to file an accurate return while ensuring you claim all allowable discounts. That is where an accountant for self-assessment comes into play. Let’s take a look at some common errors.
- Incorrect Deductions: Claiming ineligible deductions or overstating the amount of allowable deductions.
- Overlooking Income Sources: Failing to report all income, such as rental income, investment income, or income from side hustles.
- Incorrect Reporting of Expenses: Misreporting or omitting expenses that can be deducted.
- Errors in Calculations: Making mistakes in calculations, such as incorrect tax rates or allowances.
- Incorrect Filing Status: Choosing the wrong filing status, which can affect the amount of tax due.
Potential Consequences of Errors
Underpayment or delayed payment of tax can incur penalties, unpaid tax may draw intereste increasing the due amount over time, and errors in tax filing can increase the likelihood of a tax audit which is a stressful experience.
On the flip side, you can miss out on opportunities for tax saving by not claiming rebates on allowable expenses. This can be a sumptuous amount for business owners.
The role of accountants for self-assessment at a glance
- Provide guidance: Accountants help taxpayers fully understand their tax obligations.
- Prepare tax returns: They can prepare self-assessment tax returns on behalf of their clients. Their well-trained approach ensures accurate calculations.
- Offer tax planning advice: An accountant can also minimize your tax liabilities through effective tax planning strategies.
- Represent clients: In the event of a tax audit, an accountant is better equipped to represent you in front of the tax authorities.
How can an accountant help you during self-assessment?
Accountants are well-versed in complex tax laws and regulations which means that returns filed by them are likely less error-prone. They can interpret the laws and help you understand your obligations and opportunities as a taxpayer. Based on your specific circumstances, an accountant for self-assessment can offer you tailored advice.
Benefits of Using an Accountant for Self-Assessment
Time-Saving: Accountants can handle the process of gathering information, preparing tax returns, and dealing with tax authorities, thus freeing up your time.
Accuracy: Accountants have the expertise to ensure that tax returns are accurate, reducing the risk of errors and penalties.
Peace of Mind: Having a qualified professional handle your tax affairs helps you retain peace of mind and reduce stress.
Proactive Advice: Accountants can offer proactive suggestions on tax planning helping you minimize liabilities and claim all rebates you are eligible for.
Choosing a Qualified and Trustworthy Accountant
Experience, expertise, niche knowledge, technological prowess, and personalized care, you need the combination of these qualities in your accountant. It’s the combination of qualities that’s hard to come by – you may find a tax advisor with great credentials who doesn’t fit your specific needs. This is where FinBridge Advisors comes in. With a pool of experienced accountants and legal professionals with varied vertical-specific expertise, FinBridge Advisors creates the perfect solution for both individuals and businesses. You will find just the support you need during the self-assessment season from FinBridge Advisors for a competitive price. This can be the beginning of a great relationship.