Is it worth getting an accountant?
Discussion
Last year was the first time I had direct dealings with HMRC. 2013/14 was the first year I had to submit a self-assessment for a second income. I am teacher, earning a modest £27k, and took on extra work tutoring. In 2013/14 my earnings from this were about £5100. I mashed the numbers into the HMRC tax calculator and it spewed out a number that I couldn't argue with for lack of knowing how. I only managed to clear my tax bill for 2013/14 and the payments on account (including July's) this morning. All in, including payments on account, it came to about £3000. When I did this calculation my earnings from April 2013 to April 2014 in my 'proper' job were £15k. £3k was a lot more than I expected.
For the next bout of self-assessment, 2014/15 I have £6800 to declare on my tutoring. I don't want to find myself stuck to pay this tax bill again, so I have put aside 25% of earnings to cover it... and think it will be relatively pain-free.
However, and this is where it gets complicated, my position in the tutoring company is changing - I am going from being a salaried partner to being self-employed. So, from April 2015 to August 2015 I was a salaried partner, but from August 2015 to April 2016 (and onwards) I will be self-employed and able to claim various expenses. I expect my earning to also go up to £10000.
Is it worth getting an accountant, or should I just persevere and get better with numbers? How much would they be? £300?
For the next bout of self-assessment, 2014/15 I have £6800 to declare on my tutoring. I don't want to find myself stuck to pay this tax bill again, so I have put aside 25% of earnings to cover it... and think it will be relatively pain-free.
However, and this is where it gets complicated, my position in the tutoring company is changing - I am going from being a salaried partner to being self-employed. So, from April 2015 to August 2015 I was a salaried partner, but from August 2015 to April 2016 (and onwards) I will be self-employed and able to claim various expenses. I expect my earning to also go up to £10000.
Is it worth getting an accountant, or should I just persevere and get better with numbers? How much would they be? £300?
How come you are going "self employed" with the same people who had you as a "partner". Sounds to me like they are playing pretty fast and loose with their engagements with their "staff".
How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
^^ Important questions.
You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
Also possible that the language used by the OP is somewhat 'loose' throughout - non-accountants often don't appreciate the specific meanings of words - there is a chance that he was self-employed all along but hasn't understood it that way? Question to OP: did you get a P60 and wage slips / were you paid through PAYE to start with?
oop north said:
Worth getting an accountant who already has some tutoring clients - less likely to get someone who doesn't know what they are talking about, that way. Self-employment is a bit tricky so worth getting help for that. A good accountant will effectively cost you less than their fee
I just didn't know if I as earning enough to warrant the fee of a good accountant. Eric Mc said:
How come you are going "self employed" with the same people who had you as a "partner". Sounds to me like they are playing pretty fast and loose with their engagements with their "staff".
How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
I requested the change. As a salaried partner I couldn't claim taxable deductions, and using my car was a big part of tutoring. The nature of the engagement is changing as I am now providing consultancy to the company. I will also be earning significantly more as such. How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
Ozzie Osmond said:
^^ Important questions.
You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
I am in PAYE as a teacher, yes. And 2013/14 was my first year that I was registered for self-assessment in a salaried partnership. You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
HMRC haven't changed my tax code. They don't collect the tax on my other earnings through my tax code. I submitted my self-assessment, they told me how much I owed them and I paid it. They project accurately and the payments on account reflect this.
I just used £300 as I had seen that on another thread. I really don't have a clue, how much is the 'going rate', or does it not work like that?
Now that I am self-employed, rather than a salaried partner, I can actually claims expenses. I think I could have claim expenses (namely motoring) as a salaried partner, but it is more complicated and it was made clear to me that owing to this complication it wasn't going to happen. Perhaps laziness on the director's part, not sure.
I am more concerned about what to about the fact I was a salaried partner April 2015 - August 2015 and now I am self-employed.
oop north said:
Also possible that the language used by the OP is somewhat 'loose' throughout - non-accountants often don't appreciate the specific meanings of words - there is a chance that he was self-employed all along but hasn't understood it that way? Question to OP: did you get a P60 and wage slips / were you paid through PAYE to start with?
I don't if being a salaried partner is just a type of self-employment. In the self-assessment process it was definitely specific toward partnership. I don't get a P60 from the tutoring company, I get a partnership statement. I have never been PAYE with the tutoring company, just PAYE with my 'proper' job teaching in school.I am thankful for the help guys. Yes, I am using loose terms or indeed misusing terms and I'm sure that is cringe-worthy to those in the know. Appreciate your patience and time.
Edited by JeS10 on Sunday 16th August 00:31
JeS10 said:
oop north said:
Worth getting an accountant who already has some tutoring clients - less likely to get someone who doesn't know what they are talking about, that way. Self-employment is a bit tricky so worth getting help for that. A good accountant will effectively cost you less than their fee
I just didn't know if I as earning enough to warrant the fee of a good accountant. Eric Mc said:
How come you are going "self employed" with the same people who had you as a "partner". Sounds to me like they are playing pretty fast and loose with their engagements with their "staff".
How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
I requested the change. As a salaried partner I couldn't claim taxable deductions, and using my car was a big part of tutoring. The nature of the engagement is changing as I am now providing consultancy to the company. I will also be earning significantly more as such. How is the nature of the engagement changing?
Will you be doing exactly the same work?
Who decided you were to be "self employed" - you or them?
Ozzie Osmond said:
^^ Important questions.
You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
I am in PAYE as a teacher, yes. And 2013/14 was my first year that I was registered for self-assessment in a salaried partnership. You are presumably in PAYE as an employed teacher and reported some self assessment from your tutoring. You say you are now up-to-date with tax paid.
What have HMRC done with your PAYE tax code? Left it alone or tried to adjust it to collect projected tax from your other earnings as well? You mention payments on account so it may well be the latter. In which case you need to keep careful track of what HMRC project you will earn vs what you actually earn. Any "difference" will lead to a tax bill or tax refund.
As regards paying an accountant I fear you may not get very much that's worth having for £300. As you have already identified the important thing is not to "spend" your tax liability and then get a tricky bill from HMRC. Where an accoi8untant can be useful is making sure you claim all the right "expenses" if self-employed.
HMRC haven't changed my tax code. They don't collect the tax on my other earnings through my tax code. I submitted my self-assessment, they told me how much I owed them and I paid it. They project accurately and the payments on account reflect this.
I just used £300 as I had seen that on another thread. I really don't have a clue, how much is the 'going rate', or does it not work like that?
Now that I am self-employed, rather than a salaried partner, I can actually claims expenses. I think I could have claim expenses (namely motoring) as a salaried partner, but it is more complicated and it was made clear to me that owing to this complication it wasn't going to happen. Perhaps laziness on the director's part, not sure.
I am more concerned about what to about the fact I was a salaried partner April 2015 - August 2015 and now I am self-employed.
oop north said:
Also possible that the language used by the OP is somewhat 'loose' throughout - non-accountants often don't appreciate the specific meanings of words - there is a chance that he was self-employed all along but hasn't understood it that way? Question to OP: did you get a P60 and wage slips / were you paid through PAYE to start with?
I don't if being a salaried partner is just a type of self-employment. In the self-assessment process it was definitely specific toward partnership. I don't get a P60 from the tutoring company, I get a partnership statement. I have never been PAYE with the tutoring company, just PAYE with my 'proper' job teaching in school.I am thankful for the help guys. Yes, I am using loose terms or indeed misusing terms and I'm sure that is cringe-worthy to those in the know. Appreciate your patience and time.
Edited by JeS10 on Sunday 16th August 00:31
In reality, your partneship salary SHOULD be handled under the PAYE system. "Salaries" are the result of "employment" and should therefore be subject to PAYE and NI.
Just a point, if you think that suddenly becoming "self employed" automatically allows you to claim more motor and travel costs - you are very much mistaken.
Have a good read of the recent tax case of Dr Samadian -
http://www.taxation.co.uk/taxation/Articles/2014/0...
And finally, suddenly deciding that a source of income has changed its status purely because you think you can do better from a tax point of view by changing its status is not permissable. HMRC states very clearly that "self employment status" is not a matter of choice - but a matter of fact.
In order for you to be able to claim that this income is now self employed income, you must be able to show that its status has indeed changed and that you, as an individual, can prove that what you are doing is now in the nature of a trade or profession and that you can PROVE this. You need to be able to exhibit the "badges" of trade in respect of this income.
http://www.hmrc.gov.uk/manuals/bimmanual/bim20205....
Yes - you most definitely do need an accountant because you don't really understand the rules.
Eric Mc said:
I think it was clear your MAIN income was being taxed (properly) under the PAYE system. What was not clear was whether the additional income you were getting as a "salaried partner" was also being taxed under PAYE. Based on what you are now saying - iy wasn't, which was wrong. In fact, you seem to have been treating your "partnership salary" as if it was, by default, self-employed income. That is completely wrong. Partners only treat their income under self employment type rules IF THEY ARE EQUITY PARTNERS and receive their partnership income as a share of partnership profits.
In reality, your partneship salary SHOULD be handled under the PAYE system. "Salaries" are the result of "employment" and should therefore be subject to PAYE and NI.
Just a point, if you think that suddenly becoming "self employed" automatically allows you to claim more motor and travel costs - you are very much mistaken.
Have a good read of the recent tax case of Dr Samadian -
http://www.taxation.co.uk/taxation/Articles/2014/0...
And finally, suddenly deciding that a source of income has changed its status purely because you think you can do better from a tax point of view by changing its status is not permissable. HMRC states very clearly that "self employment status" is not a matter of choice - but a matter of fact.
In order for you to be able to claim that this income is now self employed income, you must be able to show that its status has indeed changed and that you, as an individual, can prove that what you are doing is now in the nature of a trade or profession and that you can PROVE this. You need to be able to exhibit the "badges" of trade in respect of this income.
http://www.hmrc.gov.uk/manuals/bimmanual/bim20205....
Yes - you most definitely do need an accountant because you don't really understand the rules.
I have been up until this point informed solely by the director and their accountant, so anything that I understand now has been misinformation from them. I know that the money I get is a share of partnership profits BUT I haven't been referred to as a equity partner. I'm starting to think that the director and their accountant don't have a clue what they're doing - at least I have an excuse and have never claimed to understand this situation. In reality, your partneship salary SHOULD be handled under the PAYE system. "Salaries" are the result of "employment" and should therefore be subject to PAYE and NI.
Just a point, if you think that suddenly becoming "self employed" automatically allows you to claim more motor and travel costs - you are very much mistaken.
Have a good read of the recent tax case of Dr Samadian -
http://www.taxation.co.uk/taxation/Articles/2014/0...
And finally, suddenly deciding that a source of income has changed its status purely because you think you can do better from a tax point of view by changing its status is not permissable. HMRC states very clearly that "self employment status" is not a matter of choice - but a matter of fact.
In order for you to be able to claim that this income is now self employed income, you must be able to show that its status has indeed changed and that you, as an individual, can prove that what you are doing is now in the nature of a trade or profession and that you can PROVE this. You need to be able to exhibit the "badges" of trade in respect of this income.
http://www.hmrc.gov.uk/manuals/bimmanual/bim20205....
Yes - you most definitely do need an accountant because you don't really understand the rules.
It was their point of view that owing to the fact my status has changed that I can be registered as self-employed rather than a partner, as I mention above. I will be earning tutoring income through the company but also privately, I will be providing consultancy to them also. They believed this means it would make more sense if I was self-employed. I said as a consequence of this I believed I would be able to claim motoring expenses amongst other things. I thought I made it clear that the move to self-employed status was not solely to benefit from taxable deductions.
As I have made clear I don't profess to knowing enough about this, hence the thread and hence my interest in getting an accountant. I really appreciate your response, you clearly know what you're talking about. How much should I expect to pay for an accountant to clear this mess up?
Edited by JeS10 on Sunday 16th August 11:32
Eric Mc said:
If you rely on the people who are paying you to offer you advice, you can be pretty sure that they are offering advice that suits their interest before yours.
I'll print that out and put it on my wall I've emailed several accountants too.
Edited by JeS10 on Monday 17th August 00:42
Gassing Station | Finance | Top of Page | What's New | My Stuff