It’s commonly said that tax regulations are simplest for sole traders, and while this is true, anyone who’s run a small business can tell you that until you’re used to them, tax regulations will seem much more complex than they really are.
Tax regulations in the UK are not designed to be so complicated that only professionals can handle them, but as they evolve constantly, it’s still important to keep up to date with the latest changes so you can understand the implications of any that affect you.
At the heart of a correctly filed tax report are accurate records and double-checked calculations. The third ingredient, however, is time – the time needed to keep your records up to date, to identify any unexpected tax liabilities and to make sure you’re aware of all tax opportunities. The less experience you have, the more time you’ll need to take.
That’s why many sole traders still want their accountants to do their self-assessment.
Should You Ask an Accountant for Your Self-Assessment?
If you don’t have time to do your self-assessment with the diligence it deserves, or if you’re not confident in your understanding of all relevant tax regulations, you might want to have an accountant handle your self-assessment tax returns. In fact, this is one of the government’s own suggestions!
Sources of Tax
The fact of the matter is that the majority of incorrect self-assessments are the result of tax sources that the filer may not have been aware needed to be part of the assessment.
It’s not just about the income received directly from your business. If you also have income from renting property or you’ve sold items qualifying for capital gains tax during the year, these also need to be represented. Even interest on your savings should be taken into account!
A sometimes-controversial factor is the High Income Child Benefit Charge. If you or your partner receive child benefit and your individual income is above £60,000, you qualify for this charge. This can also be true if someone else receives child benefit for a child who lives with you, provided they contribute at least an equal amount toward their upkeep.
This charge is levied to reduce the government’s additional spending for the keep and care of children in cases where at least one of their parents or guardians is capable of shouldering the full amount. The controversy comes from the way it is levied, meaning that if you were near the threshold and your income increases above it (but not by much), you may feel unduly affected.
Claimable Expense Types
As a self-employed individual, a number of different categories can be expensed.
This blog is not the place to go into each one in detail, but if you weren’t aware of any of the following being eligible for expenses, you may be missing out on these and others:
- Staff costs (if any)
- Office costs including phone bills, stationery, etc.
- Financial costs (insurance, bank charges, etc.)
- Costs associated with stock or raw materials
- Business travel costs
- Marketing expenses, including digital marketing
- Any training courses taken for the purpose of growing your business
As you can see, going into the specifics of what can be expensed under which circumstances would take much longer than this article – instead, we recommend you consult an accountant!
