Is it worth getting an accountant to do your tax?

Businessman Working In Office | Is it worth getting an accountant to do your tax

It’s no secret that tax can be confusing. However, there is a misconception that, if you need to file a self-assessment tax return, you must hire an accountant to prepare the return for you.

This article discusses what it is exactly an accountant does, and explores situations when engaging an accountant or tax agent can help you get your return right, as well as when you might just be better off preparing a return yourself.

What does an accountant do?

For anyone wondering “what is an accountant”, an accountant performs a variety of tasks, from preparing financial statements to advising on the financial health of a business.

As part of their work, some accounting firms also offer business tax services, and/or individual tax services, which typically involve preparing and filing self-assessment tax returns to HMRC for companies and individuals.

Self-employed woman checking the numbers - when to do your own tax return

When to do your own tax return

If you need to file a self-assessment tax return, your first thought might be that you need to appoint an accountant to act as your tax agent and prepare your tax return.

This isn’t always the case.

You may find more value by (with the help of HMRC’s guidance notes) preparing your own tax return, particularly if you have very simple affairs. This might apply where a taxpayer has straightforward income sources (e.g. employment/interest income) and is a UK tax resident.

If you want to prepare your own tax return you should, at a minimum, be comfortable with the tax return filing process. This means you should know how to submit a self-assessment tax return, know when to file, and know when and how to pay any tax due.

You can also make tax returns even easier by using tax software. You’re welcome to try our award-winning software for accounts preparation and tax returns but there are also lots of options out there to choose from.

When you need an accountant

Although taxpayers can save money by filing their own tax returns, some taxpayers really should think about engaging an accounting firm to help with their returns.

This typically applies to taxpayers who have more complex affairs. An example might be a sole trader who has income and expenses from a large or small business to report, a taxpayer with rental income, or a taxpayer who receives substantial foreign income.

Taxpayers looking for help preparing accounts and tax returns for a UK limited company should, almost always, think about using an accountant.

Although accountants will cost more compared to preparing a return on your own, bear in mind that accountants can also advise on changes in legislation or relevant tax treatments for your situation.

This additional expertise can often prove invaluable; whilst also providing peace of mind and reducing sleepless nights.

Discussing taxes with an accountant - When you need an accountant

How much do accountants charge for filing tax returns?

When looking for an accountant, it’s worth approaching a few different firms for a quote, as there can be significant variation in the cost of a tax return. This makes it impossible to give an exact figure, but below we’ll discuss several common factors which can affect the price.

  • Frequency – Some firms, for example, charge on an hourly basis, while others offer return preparation for a fixed fee.
  • Complexity – The amount you might pay for a return is also likely to depend on the complexity of your return, your residency status and basis of taxation, as well as the number of income sources. A tax return that reports income from a single rental property, for example, is likely to cost a lot less than a tax return that includes multiple rental properties, complex capital gains, or split year returns where a taxpayer arrives or departs the UK during a tax year.
  • Niche – It’s also worth remembering that some firms specialise in certain industries and sectors that might be a good fit for your situation, whether you are a foreign resident with UK income, are self-employed, or work in a specific industry, such as entertainment or farming.
  • Accreditation – Finally, it’s also worth checking to see if your preferred firm is chartered, either through a professional body, such as the ICAEW or ACCA, or a professional tax body, such as the CIOT.

Conclusion

If you are a relatively tax-savvy individual with straightforward affairs, then you should be fine to prepare your own self-assessment tax return.

However, taxpayers who are not so confident with tax, have more complex affairs, or need to submit a corporation tax return should consider engaging an accountant to assist with tax return preparation. If you’d like to know more about corporation tax check out our recent blog Corporation Tax: What is it and what you should know.

Prices for tax returns can vary substantially, so the key is to always do your research, make sure you’re happy the accounting firm understands your circumstances, and check the firm is appropriately qualified to carry out the work.

Our tax software is used by both accounting firms and individuals to prepare self-assessment tax returns to submit to HMRC.