Many people are comfortable with completing their own tax return. If your sources of income are relatively straightforward – arising from employment and some deposit account interest, for example – you will generally run into few difficulties.
However, if your tax affairs are more complex you may be overpaying tax and not be aware of the fact.
If you need significant tax planning because of an inheritance, wish to pass wealth on to relatives, or make charitable gifts, you will undoubtedly need professional advice. The UK tax system is one of the most complex in the world. Sometimes, taking steps to avoid or reduce one tax can result in greater liabilities on others. It is well worth trusting a professional to help make the tax situation clear.
If you are self-employed, you will be required to complete a self-assessment tax return. If you are computer literate and your tax affairs are relatively straightforward, you can complete and submit the relevant documents either online or in hard copy. HMRC publishes a range of information on the subject, and the advice of an ICAEW Chartered Accountant will help with this and other issues, including reclaiming tax.
If you’ve paid too much tax in the past, it may be possible to reclaim it. Examples of causes of overpayments include incorrect PAYE coding, the omission of allowable expenses from a tax return, or refunds because of the higher personal allowance available to pensioners. Again, professional advice will help you achieve a firm understanding of the subject.
There are also many legitimate ways to reduce your income tax liability, including ensuring that you are claiming all allowable expenses. For example, you could consider choosing different forms of borrowing or investment to improve your tax position, take advantage of the tax relief available on personal pension plans, change the timing of visits overseas, or even move to another country to achieve non-resident status. By drawing on the deep experience and technical expertise of an ICAEW Chartered Accountant, you can make sense of your personal tax situation with the minimum of hassle.
If you’re worried about capital gains tax (CGT), an ICAEW Chartered Accountant will be able to offer all the advice you need. You may be liable for CGT if a profit results from selling an asset that is not part of the trading stock of your business. Also, if your business is run from home, the exemption from CGT that private houses normally enjoy could be prejudiced if you seek income tax relief on part of the property’s running costs. Planning in advance can help minimise your CGT liability.
Estate and inheritance
Most transfers of assets are now free from inheritance tax, provided the donor survives for seven years after the transfer. However, this tax is complex and needs careful planning. Steps to reduce inheritance tax can result in increased potential liabilities to other taxes, such as capital gains tax. For assistance with this issue, seek the advice of an ICAEW Chartered Accountant.