Do You Need an Accountant to Do Self-Assessment?
They say that there are only two certainties in life: death and taxes. While we can’t help you with staving off the cold and bony hand of the Grim Reaper, we can provide tax information. As you know, all British citizens are required to pay taxes on any income over a particular threshold, income that exceeds £12,571 in fact, and this includes self-employment or extra income.
If you work or have ever worked then you are probably aware that your employer automatically deducts your taxes from your wages and then passes them on to HMRC on your behalf and you don’t need to worry about it. In short, unless you are self-employed, your tax deductions are automatically paid.
What is Self-Assessment?
If you are self-employed as a sole trader or have any other means of income then you need to complete a self-assessment each year so HMRC knows how much tax you are required to pay based on the previous year’s income vs. expenditure. This includes income from any source minus any tax-deductible expenses that can be relieved from your final tax bill, although all expenses need to be declared.
Tax-deductible expenses include many things but usually cover any expense that is incurred solely as part of your business such as fuel, utilities (gas, electricity, etc.), internet costs, clothing required for work and software licenses. Should you work from home then you will need to prove that these expenses are related to your business only and not used privately in your daily life.
All your income and expenses should be declared on your self-assessment each year and income can include:
- Income from property rental
- Tip donations and commissions earned
- Bonuses from investments and dividends
Your final tax bill is calculated as total income minus applicable deductions and if the sum is greater than the personal allowance of £12,570 for the previous year then you will need to pay any taxes owed. However, the sum is dependent upon your income and is likely to be nominal if it is close to the personal allowance figure. However, if you earn over £6,515 annually, you will be required to pay National Insurance contributions.
What an Accountant Can Do for You
Self-assessment can be tedious and if you are required to complete the necessary information then you must keep good records of all your income and expenditure where your business and anything else is concerned. While it’s easy to keep a record of money coming in and money going out, it is not so easy to identify the things that you can deduct from your tax bill, which is where an accountant from companies like Zuizz can come in handy.
As well as being very happy to complete your self-assessment, an accountant is able to identify anything that can be deducted from your tax bill. This can result in much lower taxes being paid on your behalf and should the deduction take your tax bill to an amount equal to or lower than the personal allowance figure then you might pay no tax at all.
What You Can Do for Yourself
Of course, you can do your own taxes if you so wish. While it might be tedious and require off-hand information, if you have kept good records then you will have little to no trouble completing a self-assessment, however, unless you have an excellent understanding of what you can deduct then you might end up paying more tax than you should.
Luckily, there are apps such as QuickBooks that can help with managing your finances, and while apps like this can’t replace the services of a professional accountant, they can assist with calculations and deductions. QuickBooks, for example, allows you to input all invoices or income sources as well as any deductions such as wages, tax deductibles and payroll. In addition, any taxes owed are automatically calculated and QuickBooks can be linked to bank accounts and HMRC directly.
Penalties for Incorrect Tax Information
No matter what method you choose to use, you should always try to have your taxes calculated and paid on time since the penalties for not what might be considered tax evasion are serious. Late or unpaid tax penalties under current UK law range from a £100 fine to up to 7 years in prison and an unlimited fine in the worst instance. Providing false tax documentation to either HMRC or the magistrate’s court is punishable by up to 6 months in prison and/or a £20,000 fine.
Given that you are self-employed and are therefore probably very busy, in order to be safe it is probably in your best interest to enlist the services of a qualified accountant from Zuizz who can not only complete the documentation properly but have it sent to the correct office in a timely manner. Then you can rest assured with the peace of mind knowing that you won’t be liable to a severe penalty, provided you have given your accountant the correct information, of course.
The Answer to the Question
A self-assessment accountant isn’t necessarily required for filing tax information and you have the option to complete a self-assessment yourself. However, the details of a self-assessment are rather specific and any and all income and expenditure needs to be declared. Unless you have kept meticulous records of your own accounts this can be tedious which could be a reason why approximately 5 million people per year either file their taxes late or don’t complete the forms at all.
This might be because filing a self-assessment can be a tedious process, especially if you haven’t kept a good record of income and expenditure, but this process is now made easier by modern-day apps such as QuickBooks that can calculate any taxes owed based on the income and expenditure information that you have provided. However, apps like these cannot do as good a job as a qualified accountant.
Incorrect, late or illegitimate tax information can land you with severe punishment including high amounts of monetary fines and prison sentences, which will of course be classed as a conviction on a criminal record that could hamper your ability to get a job in the future or secure loans and/or a mortgage.
So, do you need an accountant to do self-assessment? No, you do not, but you could be doing yourself a disservice by not fully utilising the skills of one, which means you might end up paying more tax than you should.