If You Can Add Up, You Can Fill Out A Tax Form, Or Can You?
For millions of British citizens, the Self Assessment tax return is an annoyance that must be completed annually. Self Assessment returns must be completed by those who are; self employed, earn over a £100k a year or have a large income from property (i.e with a commercial mortgage) or savings.
In order to avoid the bother of completing their own tax return, many people actually hire their own accountant to do it for them. But when cash is so tight, is this really a worthwhile way to be spending your well earned money? Some will pay over £150 just to avoid the hassle!
Expertise in knowing what to claim for: One of the main reasons that millions of people employ an accountant to handle their tax affairs is that they have specialist expertise and knowhow and can help people ensure that they claim all the correct tax expenses and tax allowances. John Whiting, head of personal tax at accountants Price Waterhouse, told The Independent: “You might be able to spot things yourself, but getting your allowances and getting as many tax deductions as you can for your tax expenses, that’s our value-added.”
It appears that the complication of completing the return and the fact it is an annual event is putting people off. It’s amazing really that the self assessment process requires us to incur further costs to complete a return. However, as it stands today, the use of an accountant seems to be the de rigour and you can understand why.
Time consuming chore: Similarly, completing your own form can be frustrating, especially for the self-employed and those who have multiple sources of income for example, property, investment or savings income. In these circumstances, it is more than understandable for an individual to seek help from an accountant as the sums can all too soon become confusing.
It is by no means impossible to complete your own tax return, and in a 2007 report, The Guardian newspaper came down on the side of doing it yourself. The report emphasised that if you have a keen eye for detail and numbers “and are willing to put in the legwork, you can easily do it all yourself.”
Definitely a job for the detailed and well organised. If your idea of an organised file is, knowing whereabouts in the garage, the shopping bag full receipts is. If you think a spreadsheet is something you take on a picnic, then this maybe the time to call in the experts.
Saving money: It may seem counter intuitive to argue that paying an accountant can actually end up saving you money. However, that is precisely the reason why many people hire an accountant to look after their business affairs. The Guardian reports that “a good accountant will almost certainly recoup the cost of the work they do for you in the efficiencies they make in your financial affairs.”
I know this may seem rather difficult to grasp but let’s look at an example. Say, you have different sources of money from various different avenues. Your accountant could set up a limited company, in turn consolidating all your income streams into one source. This not only simplifies things for you, but it can significantly reduce the amount of tax you pay. While seeking advice of this sort can cost over £1,000, because you will be paid in dividends more money is left which can be reinvested to your business. Like most investments, the long term benefits often outweigh the short term and this is a prime example of such a case.
The most basic services from an accountant will only cost around £150-£200. Not only will you be free from the chore of balancing the books, but by utilising the accountants’ expert knowledge, you can tweak your business so you can reduce your overall tax liability.
