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Cost for accountant to do self assessment tax return

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Cost for accountant to do self assessment tax return

Many self-employed people choose to use a professional accountant to help them file their annual self-assessment tax return. The cost varies depending on the complexity of your business, and how far in advance of the filing deadline you are working, but is typically around £200-£300.

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How self-assessment tax returns work

If you are self-employed or running your business as a sole trader, you will need to file annual accounts with HMRC. These show your total income and expenses for the tax year. You will pay tax that is calculated against the profit - which is your total business income, less your overall business expenses.

The online filing deadline for each period is the following 31st January. This means that you have ten months from the end of the tax year on 5th April, until your tax return becomes overdue. Please remember that if you wish to file your self-assessment tax return by filling in the paper form and posting it, you will need to submit your return sooner with an earlier deadline of 31st October.

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Do I need an accountant to file my self-assessment tax return?

It is not mandatory to use a professional accountant to help with your self-assessment tax returns. You can complete these yourself and are not obligated to seek professional help.

However, many self-employed people do not feel confident in their ability to understand all of the expenses claimable against their profit and attributable to their business.

An accountant can provide a professional service, work through your calculations quickly, and advise on what expenses and income factors are relevant to your tax return.

How much does it cost for an accountant to file my tax return?

The cost of filing your self-assessment tax returns will vary significantly. There are lots of factors to consider, including:

  • How complicated your business is
  • Whether you are very close to the filing deadline and require an expedited service
  • Where you are based - sole traders in London and the southeast will typically pay a higher rate than elsewhere
  • How experienced your accountant is

On average, an accountant will charge around £200-£300 to file your tax returns for you. This might seem fairly costly, but you may save significantly more in savings by ensuring you claim all your eligible expenses.

You also have the peace of mind of knowing that your tax returns have been prepared correctly, submitted in advance of the deadline, and have saved yourself the time it would have taken to work through the process.

That said, if you keep good records, are confident you understand the regulations and have the time, there is no reason you cannot file your tax returns yourself.

How long will an accountant take to file my tax return?

The length of time your accountant needs will depend on the complexity of your accounts. If you have precise bookkeeping and have shared all the essential figures with them, it typically takes around two working days for your tax return to be calculated and filed.

If you haven't submitted a tax return before, or haven't yet informed HMRC that you are self-employed, you will first need to register for a Government Gateway password and wait for your UTR number to arrive in the post.

This can take a couple of weeks, and longer in busy periods, so it is wise to register well in advance of your first filing deadline.

We would recommend always anticipating a couple of week's lead-time for your accountant to work on your tax return. This will give them plenty of time to raise any questions or ask for any further information they might need.

What are the advantages of using a professional for tax returns?

One of the most significant factors when deciding whether to commission an accountant to file your tax returns is stress.

While most business people will have some understanding of the tax regulations, and be able to manage the mathematics involved, the HMRC rules can feel complicated and difficult to follow.

Should you make an error on your tax return, there are opportunities to rectify the mistake in advance of the filing deadline. However, if you deliberately enter wrong figures there is a risk of investigation and even prosecution, so using an accountant takes the worry and pressure out of completing your tax return if you don't feel confident in doing so.

Other advantages include:

  • Saving time
  • Ensuring you claim all valid expenses
  • Confidence in accurate calculations
  • Advice on what to claim and how to report transactions
  • Knowing that your return will meet the deadline

What information will my accountant need to file my tax return?

If you keep clear records, sometimes it is as simple as passing these records over to your accountant to carry out your tax return calculations. Often, small businesses don't manage to keep up to date with their bookkeeping, and your accountant might require delivery of all of your business receipts.

Should you be unsure as to your total income for the year, you will need to provide records to help calculate this figure. This could be in the form of invoices, bank statements, paying in slips or cash receipts.

To file accurate tax returns, your accountant will need to know:

  • Your employment information - if you have been in employment in the same tax year, you will need your P45 or P60 to demonstrate how much tax you have already paid.
  • Any pension income - if you receive the state pension this is shown on your notification letter, or for private pensions, you will receive a certificate of the pension paid after the end of the tax year.
  • Business records for your self-employed or partnership business showing all income received, interest earned and taxes deducted.
  • Investment income - any interest earned.
  • Capital transactions - any assets sold, purchased or disposed of, and the values included in each transaction.

How can I find an accountant to help with my tax return?

The best way to find a reliable accountant is to look for either a virtual service - which is often more cost-effective given the reduced overheads of a virtual accountant - or to find an accountant in your local area.

Local accountants have the benefit of being nearby and better able to meet and discuss any concerns or questions you may have. You can also usually deliver any physical records to them in person.

Virtual accountants and freelance accountants tend to offer slightly lower rates than accountancy practices. The downside is that they might be located some way away from you, so it is always worth checking how the process works and what they will need from you to be able to file your tax return.

Who needs to file a self-assessment tax return?

If you are self-employed, run a small business that is not a limited company, or are in a partnership, you will likely be classed as self-employed. This means that your income is received without any tax or National Insurance deductions being made before you receive your pay.

When you become self-employed, you need to inform HMRC of a change in circumstances if you have switched from being employed - you should do this as soon as possible.

Self-assessment returns are required from a variety of people and businesses:

  • Sole traders
  • Landlords
  • Directors
  • Expats
  • High earners with an income of £100k+
  • CIS contractors
  • Investors

If you are required to file a tax return, HMRC will usually send you a letter reminding you at the end of the tax year. This happens if you have been employed during the year, and have since notified HMRC of your change in circumstances.

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Frequently Asked Questions

Can I file my tax returns myself?

Yes, you certainly can. If you are instructing an accountant to act for you and file your returns, you will need to permit them to file documents with HMRC as your agent.

Are there any alternatives to using an accountant?

There are! Accountants fall into many categories of expertise and qualifications. If your tax returns are relatively simple, a more junior accountant will likely be able to manage your tax returns, and will likely cost you less.

You can also find freelance accounts professionals rather than using an accountancy practice. However, it is wise to review their recommendations and experience before paying an independent account to work for you.

Other options are to download software that will help you complete the assessment. While this is still subject to human error, many modern tax-filing programs provide a step-by-step process to ensure that you enter the correct figures for every parameter.

Do accountants charge more for a late tax return?

Usually, yes. The filing deadline for online self-assessment tax returns is 31st January after the end of the previous tax year. Every year, many accountants find themselves overwhelmed with last-minute requests, which means the later you leave it, the more you are likely to pay.

If you are late in filing your returns and need to submit your return quickly to avoid further penalties, you will likely pay a higher fee.

Can I use an online accountant to file my tax return?

Online accountants usually offer a fixed rate - this has an advantage over an hourly fee since you can budget effectively for the costs. Typically, those fixed rates will depend on your circumstances and the size of your business and are often quoted against your turnover.

For example, businesses with a turnover of up to £50k might pay a fixed rate of £250, and businesses with higher turnover might pay £350.

One of the advantages of using an accountant is that they usually become available to you year-round. This means you can keep up to speed with your accounts, and be in a good position to file your tax returns in good time before the deadlines.

How will Making Tax Digital affect my tax returns?

You may have heard of Making Tax Digital (MTD) - this is the new HMRC service that is designed to streamline tax submissions. Most businesses use bookkeeping software, and MTD is a simple way of uploading accounts submissions, including things like VAT returns, automatically from your software.

MTD means that annual returns are gradually being phased out and replaced with quarterly returns. This will mean more filing deadlines, but be more efficient for a lot of self-employed people as you can file and pay your tax quarterly, rather than being met with a larger tax bill at the end of the year.

MTD also means that businesses due a refund on tax will receive their rebate faster, as they can file their claim at the end of each quarter.

Currently, MTD is being rolled out incrementally, so you will receive a notice when HMRC are transitioning you to the new system. In the meantime, you should continue to submit your returns as usual.

Is there a benefit to filing my tax return early?

There are - although it won't make a lot of difference to when your tax becomes payable, if your records are complete and you can submit your tax return in advance of the deadline, there are advantages:

  • If you are due a tax refund, it will reach you quicker.
  • If you owe tax, you have longer to plan for this.
  • If you pay tax on account, your amounts payable for the next tax year will adjust accordingly.
  • If you are employed and self-employed, your tax payable or claimable can be adjusted for through your PAYE code.

When do I have to pay the tax payable from my tax return?

The due date is the same as for your return; 31st January after the end of the previous tax year, ending on 5th April. For example, the 2019-2020 tax year ended on 5th April 2020, and self-employed tax returns must be submitted by 31st October 2020 via paper, or by 31st January 2021 online.

Your payable tax will fall due by 31st January 2021, which means that if you decide to leave your tax return to the last minute, you may have to pay your tax bill immediately on submitting your return.

If you don't pay your tax bill promptly, this can accrue interest, penalties and more severe consequences, so it is vital to stay on top of your tax liabilities.

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