If you generate income from self-employment, then you have a legal obligation to declare your earnings to HMRC and pay taxes. Tax is also due on the sale of certain assets, property purchases and inherited assets.
Many sole traders hit a wall when it comes to understanding their tax liabilities, which is understandable given the complexity of UK tax law. Whilst limited company owners have enough on their plate with VAT and Corporation Tax without the addition of their own personal taxes to contend with.
That is why it can be very valuable to work with a knowledgeable personal tax accountant, such as JMC Accountancy.
JMC Accountancy – provider of personal tax services in Cambridgeshire
When you work with professional accountants, tax compliance is a given. A good personal tax accountant, like JMC, will not only help you to understand your tax liability and avoid penalties, but we can also save you money by offering advice on how to become more tax efficient. That could be through identifying and calculating allowable business expenses or highlighting other tax reliefs you may be entitled to.
As your personal tax accountant, we can help you with regular tax planning so that your income tax bill doesn’t come as a nasty shock. We will also help you to complete your self-assessment tax return to save you time, money and sanity!
Aside from income tax, we can provide guidance on various other personal tax liabilities, such as Capital Gains, Inheritance and Stamp Duty Land Tax.
Along with our personal tax service, we offer a comprehensive range of small business accounting services, including bookkeeping, payroll, cloud accounting and management reporting. Following a detailed consultation, we can tailor the right accounting package to your business, depending on your needs and budget.
To apply for a free accounting consultation, please fill in our contact form, and we will be in touch.
What is personal tax?
‘Personal tax’ is a term for the taxes that apply to an individual rather than a company. The most common type of personal tax is income tax, which must be paid on all self-employed earnings. Taxes are also levied on the sale of certain assets and assets that are inherited.
Income tax
As an employee of a company, your tax and National Insurance contributions are automatically collected by the PAYE system set up by your employer. For self-employed earnings, including salary, dividends and interest, you are personally responsible for reporting it to HMRC through the self-assessment system each year.
Everyone in the UK is entitled to a tax-free personal allowance, which is currently £12,570. You must pay income tax on any earnings above this threshold. How much you pay depends on the amount you earn. See the most recent tax rate bands here.
You are entitled to claim tax relief on business expenses, such as travel. There are strict rules on what you can claim and what you can’t. Personal tax accountants can help you to correctly identify allowable business expenses to ensure you are not paying too much tax.
Contact us for advice on income tax and self-assessment tax returns
Capital Gains Tax
Capital Gains Tax is owed on the profit you make from selling (or ‘disposing of’) certain types of assets. This could be property (apart from your main home), business assets or shares. It also includes personal possessions above £6,000, not including your car.
Tax is due on the profit you make rather than the total sale, i.e. the difference between what you paid for the asset and what you received when you sold it. The rate of tax depends on your tax band; see the latest rates here.
Capital allowances are tax deductions on certain types of assets. They allow businesses to offset the costs of assets against their taxable profits over their useful life, therefore reducing the tax they pay. Eligible assets are known as “plant and machinery” and include vehicles, buildings, furniture and equipment.
Contact us for advice on Capital Gains Tax
Inheritance tax
Inheritance Tax is paid when property, cash or possessions are passed on to others after someone dies. The threshold is currently £325,000, which is increased to £500,000 if the asset or cash is transferred to a child. The rate is currently 40%, which is charged on the amount above the threshold.
Contact us for advice on managing inheritance tax
