When it comes to completing your tax return, do you need to hire an accountant?

Getting your tax return done can be challenging, especially during tax season. Especially if your business is complicated or you are doing it for the first time. Rather than doing it yourself, why not hire an accountant?  

You might be feeling the pinch if you are a small business owner, freelancer, or self-employed professional. To avoid tax penalties, it is important to ensure your tax return is accurate, but you'll want value for money if you hire an accountant.

Our goal in this guide is to demystify self-assessment accountant costs and the factors involved. What influences their costs, how to find a trustworthy accountant, and how to avoid scams.

When it comes to completing my tax return, how much does it cost to hire an accountant?

A self assessment accountant typically charges between £150 and £300. A business's size or complexity will determine the cost. The prices of some accountants are fixed, irrespective of the complexity, while the prices of some online services are much lower.

Is hiring an accountant a cost-effective option?

Choosing the cheapest online service can be tempting when you're feeling the pinch. 

However, according to this Guardian article, ‘anyone can call themselves an accountant’. Many websites are run by unqualified employees who do not check your data or omit any claims. It may be better for you to handle it yourself in these cases.

Looking for an accountant? Look out for these red flags

  • Neither an ICAEW nor an ACCA member

  • There are a lot of hidden costs for add-on services

  • Bills are calculated automatically, no checks are required

  • Costs or potential issues are not transparent

  • Having no experience in your industry or sector

  • Prices that seem too good to be true (probably are)

ICAEW or ACCA members are qualified accountants. Some online services advertise a low initial cost that balloons with hidden charges.

Self-Assessment: how does it work?

This is how you typically complete your self-assessment using an account:

  1. Initial Consultation: You’ll meet with your chosen accountant, discuss your financial situation and documents, and agree costs for them to do your tax return.

  2. Document Handover: You’ll gather and give relevant financial documents to your accountant. These include your income statements, invoices, receipts and more.

  3. Data Checking: Your accountant will check through your financial information. They’ll make sure everything is in order and nothing has been exaggerated or omitted.

  4. Calculating Tax: Your accountant will calculate your taxable income from your data, taking into account any deductions, allowances, and credits for your situation.

  5. Prepare & Review: After preparing your tax return for self assessment, your accountant will ensure it complies with tax rules. You’ll then get to review it.

  6. Signing Off: You’ll work with your accountant to clarify any details, ask questions, or make any changes to the finished tax return. Once you’ve signed, they can file it.

  7. Tax Return Submission: Your accountant will submit the tax return for you, ensuring they hit the correct self assessment deadlines and that it's filed to the right portal.

  8. Paying Your Taxes: You’ll be advised whether you owe any taxes by your accountant. If you’re eligible for a refund, they’ll also let you know about how to receive this.

  9. Ongoing Support: If you hire an accountant for longer than a one-off service, they’ll be able to offer advice for the rest of the year. You should also keep hold of your tax-related documents for several years, in case HMRC decide to audit you.

  10. Your tax return can be outsourced to an accountant for a number of reasons

    You benefit from an accountant's qualified expertise and peace of mind that your tax return is prepared correctly, compliant with HMRC, and optimized for your financial situation.

    Provides convenience

    By hiring an accountant, you can simplify the tax process, saving you time and stress. Instead of worrying about admin, you can focus on running your business.

    Precision

    You can be assured that you won't get into trouble with HMRC by using a trained professional. In order to avoid costly mistakes, they will ensure that everything is in compliance.

    Timely submissions

    Accountants can inform you of tax return deadlines so you can prepare your return on time. Avoid late fees and penalties by avoiding the last minute rush.

    Consultancy services

    It is possible to gain valuable insights from an accountant in addition to filing and submitting your tax return. By minimizing your tax and planning for the future, they can help you revamp your strategies.

    Provides coverage for all expenses

    Accountants help you claim all eligible deductions by understanding how allowable expenses work. As a result, you will be able to lower your tax liability, which will result in a higher profit.

    An accountant's cost will be affected by what factors? 

    Accounting rates vary from accountant to accountant. The most important thing is to weigh up what you need. There are several factors that affect an accountant's cost - here are a few to consider.

    Complexity of your finances 

    It may cost more to hire an accountant if you have multiple income sources, investments, or international transactions. Make sure everything is included.

    Services they provide 

    An accountant, bookkeeper, or financial advisor offering a one-time service is cheaper than an ongoing relationship.

    Experience and expertise they possess 

    More experienced accountants will be able to charge more. An expert could be worth the extra cost if you have a complicated business.

    Their UK location 

    There may be a difference in fees for accountants based on their location. There will always be a premium in London, for example. Shopping around is a good idea if you live in an urban area.

    The volume of business transactions 

    A large company with many employees and a high turnover could cost more. You're charged based on factors such as VAT, PAYE, and the volume of transactions.

    Software or technology they use 

    If your accountant uses advanced accounting software, they might charge you more. In general, this improves their accuracy and efficiency.

    Firm or solo accountant 

    Accountants may work in firms or as sole practitioners. It can affect what they charge, for example, if they're well-known or work for a top company.

    How last minute you left it 

    When hiring an accountant, last-minute deadlines aren't just stressful, they can also increase costs. They might have to work outside of normal business hours if they leave it late.

    Regulation changes in taxation

    If you file your tax return in a year that has had a change to the process, you might be unlucky. Researching regulations will take more time and effort on the part of your accountant.

    A tax accountant's fee will depend on these factors.

    What is the expected turnaround time?

    Your accountant's time frame for preparing your tax return varies depending on multiple factors. Usually, it takes a few hours or a few days, while complex returns can take weeks.

    In order to thoroughly complete your return, you will need to consider the following factors:

    • Complexity: Individual returns with one income stream take less time

    • Transactions: Having a lot of transactions to check takes more time

    • Organisation: Keeping detailed, tidy, accurate records will make your life easier

    • Experience: Accountants with more experience are more likely to be efficient

    • Technology: Accounting software speeds up the process if you're using it or they're using it

    • Add-ons: Adding additional services such as financial planning will take longer

    • Urgency: tight deadlines or extra time for review will affect the process

    Shortly, the same factors that affect cost also affect the amount of time it takes. It can take several weeks to process complex returns, such as those that involve multiple streams or investments.

    Discuss your expectations with your accountant and give yourself plenty of time.

Is there any information I need to provide my accountant?

Your accountant will need financial information. Among them are:

  • National Insurance number

  • Unique Taxpayer Reference

  • Contact details e.g. phone/address/email

  • Income information e.g. employment income, rent, pension, savings interest

  • Your P60 and/or P45 documents

  • Allowable deductions and credits e.g. Gift Aid deductions

  • Bank or building society statements

  • Property information e.g. property you own, mortgage interest, council tax

  • Retirement accounts and any pension information

  • Health Insurance (if applicable)

  • Any tax returns from previous years

  • Dividend statements or investment income records

Keep your financial records organized and up-to-date to speed up the process. Use accounting software or keep your financial information in a spreadsheet.

For your accountant to calculate tax correctly, you must provide the right information.

FAQs

Self-assessments are required for who?

Self-employed individuals, company directors, high-income earners, and those with complex tax affairs are typically required to file tax returns in the UK. You probably aren't if you work one regular job and pay taxes through PAYE.

Is a late return going to be charged a higher rate by accountants?

For a late return, accountants can charge more. During tax season, their workload increases, demand for their services is high, and last-minute submissions can be more difficult (and stressful).

HMRC can impose penalties on late returns, which your accountant may need to guide you through later (costing you more). It is also possible that they will charge you for the inconvenience. 

Do I have the option of completing my Self Assessment myself?

You can complete your self-assessment yourself, but larger and more complex businesses may benefit from an accountant. Don't rush if you're doing it yourself.

What is the deadline for paying my Self Assessment tax?

The due date for self-assessment taxes (if any) after your tax return is January 31st 2024. Since you'll have to submit your tax return online by January 31st 2024, it's wise to prepare your tax return well in advance.

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