Negotiating the Tax System When You Go It Alone
The UK tax system has a reputation for being complicated. But help is at hand, and the rules are not so difficult to follow.
According to data from the Federation of Small Businesses, there were 5.7 million private sector businesses in the UK in 2017, of which only 1.3 million employed other staff. In other words, more than three quarters were businesses in which the only employee was the owner.
If you count yourself among them as a sole trader, you probably enjoy the feeling of freedom that comes with being in full control of your own career and destiny. However, many sole traders feel that one of the biggest downsides to their chosen path is the fact that they have to negotiate the tax system for themselves. If this sounds familiar, tax advice and help is at hand.
In truth, managing your business finances and completing your tax return is not hugely complicated. For many sole traders, it is more a case of finding the time and support to do it accurately and to keep the tax office satisfied. Here are some of the resources that are available.
Online help from HMRC
HMRC has made significant efforts over recent years to make the nation’s tax system more transparent and user friendly. Your first port of call should be their website, where there are guides written in plain English, along with links to the necessary forms and portals that you might need.
They have also produced a number of videos and webinars that are useful and informative.
You might think that all sounds well and good, but it is all you can do to spend five minutes reading this article, and you really don’t have time to spend an afternoon poring over forms, tutorials and webinars online. After all, you’ve got a business to run.
This is why most small businesses, even sole traders, employ the assistance of a local accountant to deal with their tax return. It makes sense on every level – these are people who know the tax system inside out and do this for a living, day in and day out.
There is not one sole trader in the country who would prefer to go it alone without professional help from an accountant when it comes to dealing with taxes. The only reason some choose to do so is to save money, as they feel that using an accountant is an extra expense they can do without.
Ironically, the opposite is more often the case. A local accountant who specialises in small businesses will offer a reasonable rate that is usually far lower than most people expect, and they can often end up saving you money in three ways:
- While you are poring over your tax returns, you are not focusing on your business and earning money.
- Your accountant will often identify business expenses that you would not have thought of that can significantly reduce your tax burden.
- With professional help, you know your tax return is accurate and there will be no unpleasant fines or costs further down the line.
Years ago, the tax office ran a TV campaign with the tagline “tax doesn’t have to be taxing.” With the right help and support, that can genuinely be the case.