The British tax system is one of the most complicated systems globally. Therefore, many individuals and organisations with a complicated tax structure often seek the services of experienced chartered accountants and business advisors in the UK to help them with their financial matters. If you’re currently living and working in the UK or taking UK retirement, you’re required to pay taxes.

However, the amount of tax you must pay will differ depending on your tax residency status and personal circumstances. HM Revenue and Customs (HRMC) is the body responsible for tax collection in the UK. Tax receipts for 2020/21 amounted to more than £580 billion per year. Basic taxes include income tax, VAT, inheritance tax, CGT, and property taxes.

The system is progressive, which means that the higher-income class pays a higher tax rate. Let’s have an in-depth look into UK taxes, self-assessment tax filing and why you need a chartered tax adviser for your taxation issues.

Types of Taxes in the UK

You may be required to pay taxes to at least three different levels of the government. One is the federal government; the other is devolved governments, and the last one is to local governments which collect taxes in the form of council taxes. HRMC is responsible for federal tax collection and typically collects the following central taxes:

  • Income Tax
  • Inheritance Tax
  • CGTs
  • Property Tax
  • Corporation Tax
  • Land, Stamp and Petroleum Taxes
  • VAT
  • Excise and Custom Duties
  • Environmental Taxes

As mentioned, the local government is responsible for council tax collection. They are also responsible for enforcing a limited number of fees and charges, such as street parking fees.

British pounds.

Who is Required to Pay Taxes?

Anyone living and working in the UK must pay taxes to the government. However, the amount varies depending on various factors such as your tax residency status, domicile, salary bracket and much more. To calculate your taxable income, you need to add all your income and benefits, deduct your allowance and apply the appropriate tax rate on the difference.

The 2022/23 tax year allowance stands at £12,570, meaning any income below this threshold is considered tax-free. More than 30 million people pay taxes in the UK each year. The UK doesn’t allow joint tax filing, as each individual must file their return.

Tax Rates in the UK

As mentioned, income tax rates are progressive in the UK. Higher-income is taxed at a higher rate. Tax is charged in all income earned from various sources that are subtracted from deductions and allowances. The personal tax allowance stands at £12,570; however, there is no personal allowance on incomes over £125,000.

If you earn anything less than £12,570, you are not required to pay any income tax. The tax rate in the £12,571 – 50,270 income bracket is 20%. Anything over £50,271 up to 150,000 is charged a tax rate of 40%, and if your income is more than £150,001 per year, you’d be required to pay a tax at the rate of 45%.

UK residents can enjoy tax-free allowances for savings interests and dividends. Moreover, you’d not be required to pay any tax on the first £1,000 you earn from self-employment and the first £1,000 of any rental income.

one and two pound coins.

There are specific income areas that are not covered under the UK tax regime. Any game winnings from lotteries or games with prizes are not applicable for tax under UK law. Long service awards are also tax-exempt; however, there are certain limitations. Income arising from savings accounts are also exempt; however, there are certain conditions for the exemption. It is recommended to hire an accountant who can provide you with more information on tax exemption and rates in further detail.

Filing Your Tax Return

Filing your tax return is not as easy as it looks, and it is always recommended to get the help of chartered tax advisers & accountants for your tax returns as they can minimise the amount of tax you have to pay to HMRC. If you’re filing for a self-assessment tax return for the first time, you’ll need to register with the HM Revenue and Customs.

There is an option of registering online with the organisation. They will ask you for your employment status, and you can choose between self-employed, partnership or not self-employed. The process varies with the option that is being chosen.

As soon as you register for self-assessment, you’ll be issued a unique taxpayer reference (UTR) number. Please keep it handy as you’ll be required to use it when filing your returns. If you want to submit your tax return online, you need to set up a government gateway account. Once you’ve set up an account, you’ll get the relevant activation code in your email, complete the setup.

According to the HMRC, the whole process can take up to 20 days, so make sure you start nice and early and don’t leave everything to the last minute. Any delays in the tax filing process can result in hefty fines and penalties.

tax return

It is essential to have all relevant information and paperwork to ensure a smooth self-assessment tax filing process. Make sure you have your UTR number ready. You’ll also need your natural insurance number for your tax return. Apart from that, a lot of information will be required during the whole process, so it is better to get expert self-assessment & tax returns consulting from an experienced adviser who can explain the ins and outs of the process and guide you.

Make sure to only fill out the sections that are relevant to you. Your accountant will guide you through the sections required to fill and the relevant information that the tax authorities may require. Have a look through all the sections that have been filled before submitting them to the HMRC.

Don’t press submit instantaneously! Reviewing the return can bring up small errors that can derail the entire process. The amount you owe to the authorities will be immediately calculated after submitting the return. Always keep a record of your tax return, as it can come in convenient if officials from the HMRC decide to audit you for any reason.

This is why it is always beneficial to hire an accountant, as they will minimise the chances of errors on your tax returns and ensure that you don’t miss the deadlines of filing your tax returns. The fees you pay to your accountant to do taxes are also deductible! Hiring an expert chartered accountant or tax specialist does bring many benefits, and some of them are discussed in detail below.

a keyboard and a calculator.

Why Choose an Accountant for Self-Assessment?

Doing taxes might not be your strongest suit, especially if you own a small business or have a complicated tax structure. Therefore, it is always beneficial to hire a chartered tax adviser or an experienced tax accountant who can guide you in filing your tax returns.

Self-assessment tax returns must be completed once a year, and it indicates how much taxable income you’ve earned during the year and lists any deductibles or expenses that you may be able to claim.

 A chartered accountant specialising in tax can help you with all your complex tax needs. They will help you navigate through the complexities and help you legally maximise the reliefs you are eligible to claim, and ensures that the whole process is efficient and smooth.

One of the most significant benefits of hiring a professional accountant for your tax returns is that it will minimise the errors in your filings. You’ll have a thousand other things to worry about as a small business owner, and tax filing will only add more pressure. Doing taxes requires undivided attention and focus. You’re bound to make mistakes on your returns if you’re  multi-tasking it.

looking information on taxation.

Errors can trigger HMRC audits which can be quite time consuming and stressful. Getting an accountant to do your tax returns will ensure no errors on your tax returns. The last thing you want is a tax audit, and hiring an accountant minimises the chances of that happening.

Personal tax self-assessment can be highly stressful and frustrating if you choose to do it yourself. Complex tax structures and inadequate knowledge about deductions, allowances and other things can make the entire process quite tricky. It will eat up a lot of your time, which can be best spent elsewhere on your business.

Getting an accountant to do your self-assessment tax returns will ensure a smooth, easy, and stress-free process. They will handle all the complexities of the tax return so that you can focus on other pressing areas of your business.

Probably one of the most significant and underrated benefits of hiring an experienced accountant to do your tax returns is that they can help you save money on your tax return. These qualified chartered tax advisers will have in-depth knowledge of all areas of tax and can legally find ways to reduce the amount of tax you’d need to pay to the HMRC.

You may pay too much tax on your returns if you decide to do the returns yourself. An accountant will help you save money on your tax bill that can be spent on other business

areas. The role of an accountant is often underestimated. They’re here to provide you with specialist advice on operating your business efficiently. There are numerous benefits of hiring an accountant. However, you need to ensure that you hire one that is experienced enough to tackle your complicated tax issues.

looking for an accountant.

Perhaps the most significant benefit of hiring an accountant to do your taxes is that they bring an unprecedented level of experience and expertise to help you navigate complex tax and financial matters. They will handle all such things while you focus on other pressing business areas. An expert accountant will ensure that your business complies with all financial regulations, act as your representative to the HMRC, and ensure that everything is running smoothly.

You can only experience such benefits if you hire a tax adviser or an accountant who has significant knowledge, experience, and expertise in complicated tax matters. You need to choose an accountant wisely, as they can make or break your tax return. Hiring an accountant should be at the top of your list if you’re a high-net-worth individual or run a business with a complicated tax structure.

Refrain from hiring inexperienced professionals, especially if you have a complicated tax or finance structure. As mentioned above, an experienced professional can help you in various financial areas of your business. It can be challenging to find a qualified and experienced accountant who can help you out with your complicated tax matters.

If you’re on the lookout for one and are struggling to find one, you’ve certainly come to the right place. IBISS & Co are one of the best personal tax advisors in the UK. Our unwavering commitment to providing the very best accounting, tax and business advisory services has enabled us to become one of the best chartered tax advisers & accountants in Walsall.

We can help you out with various complicated tax and business advisory issues. We have some of the best accountants in the country that hold the necessary qualifications. We have extensive experience dealing with some of the most complicated tax issues across the country.  

discussing tax structures.

We have worked with some of the leading businesses in Walsall and have helped them reduce their tax bills through legal ways. If you own a rental property or have a complex business tax structure, we help you out. We can help you with your landlord self-assessment tax return, inheritance tax planning, non-resident landlord self-assessment, etc. Our expert services and focus on providing the best experience to our clientele will ensure that your business is in safe and secure hands!

 Contact us today for more information.

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