Tax - do I need an accountant if I only earned circa £10k last year?

[unusednickname]

Hi all,

I know the answer might just be 'yes you do' but...

I have done some very limited consultancy this year. I registered self employed last year and filled in a tax return - was rather disgruntled as I hadn't yet earned anything but - joy of joys, got a tax rebate on stuff I'd paid on my salary when still employed . I realise now I could probably have claimed some expenses for the set up of my business last year so have definitely lost out through not having an accountant last year. So I think I should get one because I'm clearly a bloody idiot when it comes to money

BUT I've only earned about £10k so only 1K or so is going to be taxable. So given that an accountant will cost a few hundred is it worth it?

And if so where do I find a reliable accountant who won't cost too much?

If you're good with maths and pretty organised sign up with FreeAgent instead of paying an accountant. It's a one off fee for the year and is simple accounting software that will do the tough calculations for you, produce pay slips and all sorts of stuff. You then just need to take the figures and pop them in your self assessment tax return and voila, easy and done!

You could have a look at the booklet that will go with the relevant section of the tax return and see if it makes sense. Obviously it won't help you get creative but with such a small sum of taxable income there probably is so little room for creativity that it would be cancelled out by the accountant's fee.

If so you should find a decent accountant will probably refuse to do the return for you. I do know of a very good one in Leeds if you would like a recommendation, however!

You can also post for free (and obviously 'take with a pinch of salt') advice on Money Saving Expert and The Motley Fool. HMRC will answer questions as well.

Very helpful thanks

I suppose my issue is that I have really no idea what I can claim for expenses and no idea where to start with things like claiming a portion of my mortgage for example (I WAH). My husband thinks I can claim back VAT on loads of things but I don't know how that could possibly be the case... Those websites might be a good place to start.

I feel like Which might be the place to start?

My DH is self employed as a driving instructor. The first year he paid some accountants £300. Since then (6 years) he's had a chap who advertises himself as a 'tax adviser' in the village rag come to the house. He's normally here a couple of hours & costs £40.

You can only claim back VAT if you're VAT-registered. I'm assuming (with £10k income) you're probably not so no VAT reclaims.

Mortgage interest - a tricky point. You may be able to if you work a lot at home and use one room specifically. If you think it's going to be a small fraction it may be easier to use a flat rate of £4 per week which HMRC usually accepts as a reasonable estimate of use of home expenses.

Do you do any driving/travel for work? You can claim for this.

Any use of mobile phone? There may be some claims there.

Stationery? Printer ink, paper, pens?

You definitely need an accountant by the sounds of it

With all due respect do not listen to your dh, and be aware that by claiming running costs of your home as business expenditure you may open yourself up to capital gains tax on your home. So it is worth getting the correct advice

Its possible to find someone who will do a basic tax return for £200-300 so really not much in the grand scheme of things and if you came to us (which I'm not soliciting for - just saying how we handle 'small' ones sometimes) - we'd be happy to teach you how to do your own bk and future tax returns with the knowledge that you can call for advice if necessary. There are plenty of others I know of who do this too, so don't be afraid to call around your area and ask!

www.hmrc.gov.uk/manuals/bimmanual/bim47825.htm some examples of how to apportion the costs of running a home if a business is also run from the premises. As you am say it's not straight-forward and depends on the level of use.

The manual refers to £2 per week, this amount is now increased to £4 per week and HMRC are unlikely to question it.

As you am say = as you can see

Thanks all. I thought the VAT thing was weird. Would claiming £4 a week open my up to the capital gains tax thingie? Will using the word 'thingie' confirm that I definitely need an accountant?

Hee :) thingie is a technical term, I think. No, £4 a week will not mean that part of your house will become business premises and therefore taxable for capital gains tax (I'm assuming this is what you meant). The only way that will happen is if you have a designated area set aside fr business that never gets used for anything else. Like if you do beauty treatments from your house and have kitted out one room for it, which means it won't get used for anything personal. But if you have an office with a computer where you work and in the evenings you use it for mumsnetting and kids play on the computer on the weekend then the room is not purely for business and the capital gains tax relief is applicable for the whole house.

Do you know anyone who might be able to recommend an accountant? My dad is a tax adviser (pretty much retired so I'm not touting for business) who worked for HMRC then in practice before setting up on his own and only advertised once when setting up his business.

All other new clients came by word of mouth and he was ridiculously good value because (a) he was a tax expert but (b) not a qualified accountant. I speak from experience as a Big 4 accountancy firm
alumnus - for a simple business if you do use an accountant you don't need a firm with several partners whose charge out rate will be high.

DH's firm would charge about £200 for your tax return, he works for a local firm of accountants. He is a qualified tax technician not an accountant. I think it is worth you either paying for someone to do your tax return for the first year so you see what you can claim. Or read up on all the notes yourself then phone a local accountant and ask for a short introductory meeting in person or over the phone. Make sure you say it is a tax issue not accounts. Accountants should offer a free half hour to potential clients same as a solicitor. If you have your figures all up together and just want advice on expenses etc this might be worth doing. If you want to do this, approach a small local company and do it ASAP as this is approaching their busiest time of year. (DH does a couple of these per year as its about building up recommendations, new clients and good will. And he likes helping the 'little guy.' Unfortunately for us this attitude doesn't pay well!)

If you've missed claiming things in past years an accountant may be able to claim them in retrospect. Mine saved me way more than his fee in the first year by doing that.

I WFH 5 days a week for at least 25 hrs a week, did my return myself (only covered 3 months so was easy). This year it's a full year so that HMRC link will be really helpful, thank you

Plenty of us do our own tax returns but perhaps enjoy that side of things and reading HMRC guidance and I suspect you don't.

Also you can register for VAT (although then you will need to charge it which might put some customers off) and reclaim VAT you've [paid on business expenses at any turnover. It is only that it becomes compulsory once you get to the level where you MUST register.

Remember national insurance payments too and that I think cuts in at a lower level than tax does.