You may be starting to organize your taxes for a wide range of reasons: you might have just become self employed for the first time, or you may have received money that you have to declare to the HMRC as capital gains or inheritance. In these situations, and more, knowing where to begin with your personal tax planning is important. What are some of the main areas that you need to focus on, and who can you turn to for help?
Primarily, if you are moving from employment, where your tax is covered by PAYE, to self employment, you’ll need to register for self employment with HMRC. You can be both self employed and employed at the same time, though. Once registered, you’ll pay Class 2 National Insurance, and potentially Class 4 National Insurance if you receive over £7,000 in income per year. Being self employed effectively means that you have to keep detailed records of your payments and expenses, while filing a tax return by the end of the tax year.
There are many other ways, however, in which personal tax planning is important, regardless of employment. If you receive an inheritance, or if you’re planning to move abroad, then you may have to restructure your tax liability and status with HMRC. You may also need to work out what your business expenses are if you’re working for a company where you can claim against your mileage or other parts of your job.
Once you start getting into areas like inheritance tax, trusts and estates, as well as probate law, personal tax planning becomes much more complicated. The same difficulties can apply to family trusts, off-shore investments, and what counts as capital gains for the purpose of tax. In these situations, you’ll need to be very aware of your record keeping, and of clarifying any disputes with HMRC unless you want to be audited and potentially fined or even given a jail sentence if tax has been systematically avoided over time.
If you’re planning to start a business, having a records system and accounting software is crucial. Book-keeping software like Sage can be essential if you want to keep track of your revenue and expenses, while you can also consider investing in a full-time secretary or accountant if your taxes and general finances become too much for you or a business partner to handle on a regular basis.
In these situations, you should consider organising your personal tax planning through a specialist firm, which can help you to start up your records, file returns, and check over any inconsistencies in your business or private finances that might be picked up by an audit. For example, accountants in surrey can offer structured tax plans that are suitable for your spending and revenue, as well as fixed quotes and a tailored service that increases your profits and compliance levels with HMRC before generating a significant fee.