Small Business Advice

Personal Tax Accountant Services | Expert Advice & Assistance

by Mike

Aug 24, 2023

Personal tax accountants specialise in helping individuals and small businesses manage their taxes. They can assist with tax planning, preparation, and filing, as well as a guide on tax-related issues such as deductions and credits. Working with a personal tax accountant can help individuals save time and money by ensuring their taxations are filed accurately and on time while also maximising their potential tax savings.

A personal tax summary is a document that summarises an individual’s income, deductions, and tax liability for the year. It is essential to have this document prepared accurately to avoid any discrepancies or issues with HMRC. This is where a personal tax accountant comes in handy.

With their expertise in taxation laws and regulations, personal tax accountants can help prepare a comprehensive personal tax summary that includes all the information required by HMRC. They can also advise on any deductions or credits that may apply to your specific situation, which can ultimately result in significant savings.

In addition to preparing your personal tax summary, a personal tax accountant can also provide ongoing guidance throughout the year regarding any changes in taxation laws or regulations that may affect you. This ensures you are always up-to-date with the latest information and can make informed financial decisions.

Another benefit of working with a personal tax accountant is the peace of mind it brings. Taxation laws are complex and constantly changing, making it easier for individuals to keep up with professional assistance. By entrusting your taxes to an expert, you can rest assured that everything will be handled correctly and efficiently.

What is a Personal Tax Accountant?

Identifying Tax Deductions

Personal tax accountants specialise in providing tax services to individuals for their taxes. These experts can help individuals identify tax deductions, which can significantly reduce their taxable income. Personal tax accountants deeply understand the complex tax laws and regulations that govern personal taxes, allowing them to provide valuable guidance on maximising these benefits.

Suppose you’re self-employed or own a small business. In that case, your personal tax accountant can assist you in claiming deductions for business-related expenses such as travel costs, equipment purchases, and advertising expenses.

Ensuring Compliance with Tax Laws and Regulations

One of the primary roles of a personal tax accountant is to ensure compliance with the various tax laws and regulations. This includes staying up-to-date with any changes in the law that may affect an individual’s personal taxes. Personal tax accountants must also keep detailed records of all transactions related to their client’s personal taxes to ensure they comply with all applicable laws.

In addition, personal tax accountants must also be able to represent clients in front of HMRC or other regulatory bodies if necessary. They should have excellent communication skills that allow them to explain complex financial information in simple terms so clients understand what’s happening with their finances.

Calculating Personal Tax Allowances

Another critical role that personal tax accountants play is helping individuals accurately calculate their personal allowances. A person’s allowance determines how much money they can earn before being subject to taxation. Calculating these allowances involves considering factors such as marital status, age, income level, and taxable benefits among others.

A competent personal accountant will take time to understand each client’s situation before determining the appropriate allowance amount. This process can be complicated, but it is essential to ensure that individuals do not pay more tax than they need to.

Tax Planning Strategies

Personal tax accountants can help individuals develop and implement tax planning strategies that minimise their tax liabilities and maximise refunds. These experts deeply understand the various tax laws and regulations, allowing them to identify opportunities for savings that many people may overlook.

For example, personal tax accountants can advise clients on structuring their investments to reduce their taxable income. They can also guide you on effectively taking advantage of available deductions and credits. Personal tax accountants can help clients plan for upcoming changes in the law or regulations that could affect their taxes.

Preparing and Filing Personal Tax Returns

Personal tax accountants are responsible for accurately preparing and filing their clients’ tax returns. This process involves collecting all relevant financial information from clients, including income statements, investment records, expense receipts & other documents required by HMRC or authorities.

After gathering this information, personal accountants will use specialised software programs to prepare the necessary forms accurately. They will then file these forms electronically with the appropriate agencies on behalf of their clients.

Ongoing Support and Advice

Finally, personal tax accountants offer ongoing support and advice on personal tax matters throughout the year. This includes answering questions about specific transactions or investments and providing guidance on maintaining accurate records of all financial transactions.

Self-Employment and Self-Assessment Tax Return

The UK tax system is complex and can be challenging for self-employed individuals to navigate. One of the most important aspects of self-employment is completing a self-assessment tax return. This section will discuss the tax implications of being self-employed, including income tax, capital gains tax, exemptions, and deductions.

Income Tax for Self-Employed Individuals

When you are self-employed in the UK, you are responsible for paying tax on your profits. The amount of income tax you owe depends on your taxable income. You do not have to pay income tax if you take less than your personal allowance threshold (currently £12,570). However, if your taxable income exceeds this threshold, you must pay income tax at the applicable rates.

The UK has a progressive tax process, meaning higher earners pay more taxes than lower earners. Currently, there are three basic rate bands: 20%, 40%, and 45%. The basic rate band applies to taxable incomes up to £50,270; the higher-rate band applies to incomes between £50,271 and £150,000; and the additional rate band applies to payments over £150,000.

It’s essential to keep accurate records of your business expenses, as these can be used to reduce your taxable profit. Costs such as office rent can be deducted from your earnings before calculating how much income tax you owe.

Capital Gains Tax for Self-Employed Individuals

If you sell an asset that has increased in value since its purchase date (such as property or shares), you may be liable for capital gains tax (CGT). A self-employed individual in the UK who owns assets subject to CGT liabilities, when sold or disposed of during their lifetime, may require professional advice from a personal tax accountant.

The current CGT rate for basic-rate taxpayers is 10%, while higher-rate taxpayers pay 20%. However, exemptions and reliefs can reduce or eliminate the amount of CGT you owe. For example, entrepreneurs’ relief allows business owners to pay a reduced rate of 10% on any gains made from selling their business up to 1m.

Exemptions and Deductions for Self-Employed Individuals

Self-employed individuals may be eligible for certain exemptions and deductions when calculating their income tax. One of the most significant deductions is expenses related to running your business. These include office rent or mortgage interest payments, travel costs, and equipment purchases.

The British government has published a helpful page about capital allowances. Capital allowances provide tax relief for businesses, allowing you to deduct some or all of the value of an item from your profits before you pay tax.

It’s essential to keep accurate records of your expenses as these can be used to reduce your taxable profit. You should also ensure that you only claim legitimate expenses that relate directly to your business activities.

Additional Rate Taxes for Self-Employed Individuals

If you earn over £100,000 per year as a self-employed individual in the UK, you may be subject to additional rate taxes on your income or capital gains. The other rate band applies to payments over £150,000 and has a current tax rate of 45%.

Completing a Self-Assessment Tax Return

Assessment Tax Return: An Overview

Completing a self-assessment tax return is an annual obligation for individuals in the UK. The tax return preparation process involves reporting income, expenses, and other relevant information to HMRC. This process can be daunting, but ensuring compliance with UK tax laws is essential. In this section, we’ll provide a brief overview of the tax return process.

Firstly, it’s important to note that only some people must complete a self-assessment tax return. If you’re employed, and your employer deducts taxes from your salary through PAYE (Pay As You Earn), you will only need to complete a self-assessment tax return if you earn over 100K or have additional income sources or are self-employed.

If you need to complete a self-assessment return, there are two ways: online or by paper. Filing online is generally quicker and more convenient than filing by paper. However, if you choose to file by paper, make sure that you submit your completed form before October 31st each year.

Reporting Obligations

The assessment tax return requires individuals to report their income from various sources, such as employment, rental, dividends from shares or company investments, and interest earned on savings accounts. It also requires reporting of any capital gains made during the year.

In addition to reporting income sources, taxpayers must also report certain expenses incurred during the year, such as business expenses for those who are self-employed or have rental properties. Other allowable deductions include yearly charitable donations and pension contributions paid into personal pensions.

Contacting HMRC

If you need help completing your self-assessment tax return, it’s recommended that you contact HMRC or seek advice from a personal tax accountant. They can guide what information needs to be included in the return and help ensure compliance with UK tax laws.

Penalties for Non-Compliance

Failing to comply with reporting obligations can result in penalties and other consequences. Penalties for late filing of assessment tax returns start at £100 and increase over time. Interest is also charged on unpaid taxes after the payment deadline.

Online Tools and Resources

HMRC provides online tools and resources to assist taxpayers with completing their assessment tax returns. These include online calculators, webinars, and video tutorials. Taxpayers can access support through HMRC’s social media channels like Twitter and Facebook.

Government Gateway Identity Number and Personal Tax Account

Unique Identifier: Government Gateway Identity Number

The UK has made it easier for taxpayers through the Government Gateway system. The system provides access to various government services, including the Personal Tax Account. Individuals need a unique identifier, the Government Gateway Identity Number, to use this service.

The Government Gateway Identity Number is a unique identifier HMRC uses to link an individual’s tax information to their Personal Tax Account. It is a 12-digit number assigned when you create your account on the Government Gateway website. This number is a reference point for all communications between taxpayers and HMRC.

One benefit of having a Government Gateway Identity Number is that it allows you to manage your tax affairs online. You can update and view your personal details, check your National Insurance contributions, and track any state pension entitlements you may have. HMRC uses this number to communicate with taxpayers about essential deadlines and payments.

Obtaining Your Unique Identifier: Gateway ID

You will need a Gateway ID and password to access your Personal Tax Account and obtain your Government Gateway Identity Number. A Gateway ID is essentially an online account allowing you to access various government services securely.

To start creating a new account or accessing an existing one, visit the Government Gateway website and follow the instructions. Once you have created an account or accessed an existing one, you will be prompted to set up two-factor authentication for added security.

If registered for Self Assessment or PAYE Online Services with HMRC, you will have a Government Gateway account. In this case, you only need to log in using your existing credentials.

Managing Your Taxes with Ease

Access to your Personal Tax Account through the Government Gateway system makes managing your taxes more convenient. With just a few button clicks, you can review and update your personal details, check your National Insurance contributions, and track any state pension entitlements you may have.

Moreover, the Government Gateway Identity Number ensures that all communications between taxpayers and HMRC are secure and efficient. Whether receiving notifications about tax deadlines or making payments online, having a unique identifier like this makes managing your taxes a breeze.

When to Pay Your Tax Bill and Personal Tax Account

Due Dates for Tax Bills

The due dates for tax bills in the UK are essential to remember. The tax bill is usually due on January 31st for the previous tax year. On July 31st, any payments on the account are also expected. If you owe less than £3,000 in taxes, you can collect it through your PAYE tax code instead of paying it all at once.

Self-Employed Taxes

If you’re self-employed, a different set of rules applies when paying taxes. You’ll need to pay your tax bill by January 31st, after the end of the tax year. You may need to make payments on account by January 31st and July 31st each year.

Basic Rate for Income Tax

The basic rate for income tax in the UK is currently 20%. However, you’ll be subject to higher rates if you earn over a certain amount. It’s crucial to stay up-to-date with current rates to calculate what you owe accurately.

Tax Year Dates

The tax year extends from April 6th to April 5th of the following year. It’s essential to remember these dates so that you can plan accordingly and avoid any late fees or penalties.

Paying Taxes Today

Paying taxes today has never been easier, thanks to advancements in technology. You can pay online using a credit or debit card or direct debit from your bank account. HM Revenue & Customs (HMRC) offers various payment plans if needed.

Case Study: John’s Experience with Late Payment Fees

John is a self-employed contractor who forgot last year’s January 31st payment deadline. He was hit with a late payment fee of £100 and interest charges on top of what he already owed. Since then, John has set up reminders and automated payments to avoid any future late fees.

Analysis Data: Late Payment Fees in the UK

According to HMRC, over 6 million late tax returns were filed in the UK for the 2019-2020 tax year. This resulted in over £600 million in late payment fees and interest charges. Staying on top of your taxes is vital to avoid becoming a part of this unpleasant statistic.

Cost of Hiring a Personal Tax Accountant

Flat Fees vs. Hourly Rates

The cost can vary. One main factor influencing the price is whether the accountant charges a flat fee or an hourly rate.

A flat fee is a set amount for the accountant’s services, regardless of how much time they spend working on your taxes. This can be beneficial if you have a simple tax situation and expect little help from the accountant.

If you have a more complex tax situation or anticipate needing more assistance from the accountant, an hourly rate may be more appropriate. With an hourly rate, you will pay for each hour the accountant spends working on your taxes. While this can cost more in some cases, it can also ensure that you receive comprehensive tax assistance.

Factors That Influence Cost

Aside from flat fees vs hourly rates, several other factors can influence how much you will pay for a personal tax accountant’s services. These include:

  • The complexity of your tax scenario: If you have multiple income streams or investments, own rental properties, or run your own business, your taxes may be more complicated than someone with one job and no assets.
  • The accountant’s location: Generally, accountants in larger cities charge higher rates than those in smaller towns or rural areas.
  • The experience level of the accountant: A highly experienced and reputable personal tax accountant may charge more than someone just starting in their career.

Potential Savings

While hiring a personal tax accountant does come with a cost, it’s important to remember that it may save you money in the longer term. By ensuring that you are taking advantage of all available deductions and credits, an experienced personal tax accountant can help reduce your tax liability.

For example, let’s say you are letting a rental property and need clarification on which expenses can be deducted from your taxes. If you hire a personal tax accountant, you may avoid deductions that could have saved you hundreds or thousands of dollars. However, if you hire an accountant knowledgeable about rental properties and their associated tax implications, they can help you identify deductions you didn’t even know existed.

Cross-Border Tax Planning and Personal Tax Advisory

Tax planning is critical to managing personal finances for individuals with assets or income in multiple countries. Cross-border tax planning involves creating a tax-efficient strategy that considers the applicable tax laws and regulations in different jurisdictions to ensure compliance and minimise tax liabilities. It is vital to seek advice from personal tax advisors, who can provide guidance on complex tax systems and identify opportunities for tax relief and savings.

Specialist Tax Consultants

Specialist tax consultants can help clients navigate complex cross-border tax systems. They are experts in international taxation, with a profound understanding of the various legal frameworks governing taxation across different jurisdictions. They can advise clients on structuring their affairs to take advantage of available tax breaks and avoid pitfalls. Specialist tax consultants also help clients comply with their obligations under local laws, such as filing annual returns, paying taxes, and maintaining proper records.

Applicable Tax Laws

Personal tax advisors have an in-depth knowledge of applicable cross-border tax laws that affect individuals’ financial affairs across different jurisdictions. They keep abreast of changes in legislation that may impact their clients’ financial positions, ensuring they remain compliant at all times. Personal advisors work closely with specialist consultants with trusts, estate planning, or expatriate taxation expertise.

Tax Reliefs

Cross-border taxpayers may be eligible for various reliefs depending on their circumstances. For example, double-taxation agreements between countries may provide relief from paying taxes twice on the same income or asset. Tax advisors can help clients identify opportunities for tax relief and ensure that they claim all available deductions and credits.

Conclusion on Personal Tax Accountant

In summary, a personal tax accountant is a specialist who will help you navigate the complicated world of taxes. A personal tax accountant can provide valuable guidance and support if you are self-employed or need assistance with your self-assessment tax return.

Completing a self-assessment tax return can be daunting, but with the help of a personal tax accountant, you can ensure that everything is done correctly and on time. They can also assist with obtaining a Government Gateway identity number and setting up a personal tax account.

A personal tax accountant can advise when payments are due and how much you should pay. They can also help with cross-border tax planning and provide personal tax advisory services.

While hiring a personal tax accountant may come at an additional cost, their expertise and knowledge can save you money in the long run. Plus, having peace of mind knowing that your taxes are being handled properly is invaluable.