Income Tax Accountants

Income tax is for individuals or taxpayers, and it varies with respective income or profits. It’s a tax we all have to pay, and it is generally related to your taxable income. We will provide an overview of the UK Income Tax system, the reporting process and the role of Income Tax Accountants.

What is Income Tax?

Income tax in the UK is overseen by HM Revenues and Customers (HMRC), a Government department. The tax itself is payable by individuals, calculated on various types of income streams, however some types of income are exempt for example certain state benefits.
Further information regarding which income streams are taxable or not taxable can be found on the UK government’s website.

Income tax allowances are also available depending on an individuals’ personal circumstance and the type of income.

Annual personal allowances are set by the Government, allowing individuals to earn a set amount per financial year before paying tax.  For the current tax year 2020-21, the personal allowance is £12,500, meaning that an individual can earn £12,500 without having to pay any income tax. Anything earned above this amount is taxable at varying rates depending on the relevant tax bands.

 

HMRC communicate an individuals’ personal allowance for each financial year via a letter of a tax code notice.  The notice advises of any adjustments to a personal allowance including any approved expenses which could increase the tax free allowance, or advise of any reductions to the allowance for reasons such as knowledge of tax owed. The tax code notice also informs of any relevant split of the allowance between employments.  It is the individuals’ responsibility to review their tax code calculation each year and to update HMRC with any relevant changes or discrepancies.  HMRC can be contacted either online, by telephone or by post.

An individual should also check that where applicable, any employers apply the same tax code as advised via HMRC when processing payroll, to avoid any tax repayment issues.

What do Income Tax Accountants do?

At Finance Equation, we can assist clients not only by undertaking the filing of tax returns on a client’s behalf but by also applying their expert knowledge to each individual circumstance. This ensures that the information submitted is checked and that all applicable allowances are applied. Other offerings can include future tax planning and investigating tax matters.

The self-assessment process can seem rather daunting, with multiple stages and various elements of the forms to complete.  The required organisation, preparation and completion of the process can take up valuable time and resources, and that’s where working with a good Income Tax Accountants can help.

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What is an Income Tax Return?

An income tax return is a document that summarises the various type of income earnt and how much income tax is payable over a financial year. The UK tax year runs from 6th April to the 5th April.

If an individual solely pays tax via the Pay As You Earn (PAYE) system, they may not be required to complete a tax return, however HMRC requires various types of individuals and businesses to submit annual reports to confirm total income levels and make any additional tax repayments.  It is each individuals’ responsibility to check if they are required to complete a tax return and to ensure the submission is made every financial year.

To calculate this, the reporting process requires various details to be input such as; total income, business profits or losses, details of allowances, allowable reliefs and other deductions or expenses. By completing the online self-assessment process, all of the required information is gathered in the necessary order to generate the total taxable income for the period and apply any approved deductions, before calculating the final tax payable.

Over recent years, HMRC have developed the reporting process to be entirely electronic.
The online process involves an initial registration including security steps which take some time to complete due to the requirement of multiple pass codes, being issued via various methods including post.  There are also strict deadlines for both the submission of returns and the subsequent tax payments that need to be observed otherwise fines are applicable.
Typically a self-assessment tax return should be submitted, and tax paid within ten months of the tax year-end. For example, the usual annual deadline is the 31st January for the previous year’s 5th April tax year-end.

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What to look for in an Income Tax Accounting Professional?

Alongside ensuring that our tax professionals have the relevant qualifications and insurance to provide the services required, much like any good relationship, one of the most important elements is that you feel comfortable and can trust the Professional. References for an Income Tax Professional can also be useful. A qualified and experienced professional may cost more but our focus is not just compliance. Our focus is to help you legally save tax therefore allowing you to keep more of your money.

How Our Income Tax Accountants Can Help You?

We are Income Tax Accountants based in Ilford Essex, serving businesses throughout the county, in the London and East London region.   We offer extensive experience and personal attention when it comes to completing tax returns, as well as providing personal tax advice, which can take the administrative pressure off you as well as help save you money.

We recognise that tax is a cost just like any other business cost, and therefore we will pro-actively use every legal option to reduce your overall tax liability. HMRC have a ream of Extra Statutory Concessions that provide reliefs over and above that given by law.

We undertake a continual review of these ESC to see what is new. We will even take a look at your overall tax position to see if you would save money by incorporating your business.

Call us to schedule a consultation, where we will go through the whole process with you.

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Finance Equation Ltd are multi-award-winning Chartered Certified Accountants providing cutting-edge expert services to individuals, property investors, businesses and contractors.

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The Finance Equation Ltd is a company registered in England & Wales. Company number 05116983. Business address: Finance Equation Ltd, 334 Ley Street, Ilford, Essex, IG1 4AF.

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