A large proportion of the British population has to complete their own Self Assessment Tax return every year (usually at the beginning of the calendar year). For those who own property (i.e with a commercial mortgage), have savings income or who earn more than £100k per year all have the responsibility of completing their own tax return.
The majority of people soldier on and complete their own tax return, however a large number decide to hire either a tax advisor or accountant to sort their tax affairs for them. The question to be asked though is; is it worth the £150-£200 in costs to take the inconvenience out of your hands.
The experts understand what can be claimed: Some Brits feel they have no other option but to employ someone with a full understanding of the tax process because they feel their own knowledge is inadequate. When speaking with The Independent Newspaper, John Whiting, head of personal tax at Price Waterhouse, said, “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.”
Self-employed John Gilman told the Daily Telegraph that by employing a professional, “It is such a grey area knowing what I can and can’t claim for when it comes to tax returns. I have considered going online, but it seems like the same hassle as filling out the paper forms.”
Time consuming and hassle: Completing a tax return can be time consuming and an awful lot of hassle. This is particularly true if you have various sources of income including self-employed earnings, property income and investment or savings income. Consequently, many people elect to use an accountant because they will not only do all the necessary calculations but also submit the tax return on their behalf.
While investigating the use of accountants in 2007, The Guardian newspaper came down on the side of diy, believing it to be easy enough to complete by yourself. “If you’ve got an appetite for the fine detail… and are willing to put in the legwork, you can easily do it all yourself.”
However, keeping hundreds of receipts and invoices may be your worst nightmare and you may prefer to pay a specialist to handle this for you.
Keep your hard earned in your pocket: Ironically, hiring an accountant could actually save you a bit of money, as crazy as it sounds! The Guardian further 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”. It may surprise you to know that the main reason people do hire an accountant is to save them money.
If you have multiple income streams it may well be advisable to set up a Limited Company and receive dividends. This may reduce your tax bill but the person to advice you on this would be an accountant. If this works then the benefits of the advice far outweigh the costs of the advice in the first place.
Although if you are just looking for some simple accounting work, then the cheapest can usually be found between £150 and £200. If you have little spare time to go over the books and don’t feel entirely confident due to a lack of knowledge in the field, then finding a professional can be extremely worthwhile. At the end of the day, it is entirely dependent on personal circumstance, so look at your situation to see if you could truly benefit from an accountant.