Top Tax FAQs: Answers to Your Tax Questions

Taxes can be very complicated for businesses and individuals. Many businesses struggle to plan their taxes, and that's where a skilled accountant can help. We assist businesses across Surrey and Hampshire with all their tax needs, and we can help you to do the same.

To help you out, we've created a guide to some of the most frequently asked tax questions. So read on to find answers to the most common tax FAQs, and contact us if you need any further information.

1. What Is a Self Assessment?

If you are self-employed, you will need to report your earnings for tax purposes each year via the Self Assessment tax return. You can fill it in online or on paper, and you need to provide details of your taxable income and gains for the tax year as well as listing your expenses.

Tax year starts on April 6, and the deadline for the paper tax return is October 31. For the online tax return, you have until January 31, which is also the due date for paying the taxes you owe.

Find out more about our Self Assessment services

2. Which Records Do I Need to Keep?

It is easier to manage tax when you keep accurate records. The main records you will need to keep relate to your income, invoices, expenses and capital gains. We make sure our clients keep accurate records of everything they need to, so contact us for more information.

We recommend you keep 6 years of information, plus the tax year you are in.

3. What Happens in an HMRC Investigation?

The thought of an HMRC investigation can be intimidating, but you can make it go smoothly by knowing what to expect. We can also help you prepare and provide you with guidance.

There are many reasons why you might be investigated. These can be random, but there is usually something that triggers one, such as suspicions surrounding your tax return. There are various types of inspection, including Aspect, Full and Random.

Always get help from an accountant when you face an investigation. You need someone on your side, and HMRC actually recommends hiring an accountant. We will help you to gather the evidence and financial documents you need to.

Once HMRC has made contact, you need to reply within 30 days and you might have to attend a meeting. An investigation can last up to six months or longer. A Full investigation is longer, often lasting a year or more. You may have to pay a penalty if you have done something wrong, or you might not have to pay anything at the end.

Find out more about our HMRC investigations services

4. When Should I Register for VAT?

VAT is a consumption tax added to various goods. The standard rate is 20% and the reduced rate is 5%, which applies only to certain goods. Some goods are exempt from VAT.

You need to register when you go over the threshold or you know you will go over it. This is based on your taxable turnover. The threshold is currently £85,000 over any 12-month period.

5. Can I Get a VAT Exemption?

You can apply for an exemption if you think your turnover will only go over the threshold temporarily. In this case, you have to write to HMRC and show why it won't go over the threshold in the next 12 months. Then HMRC will decide if you need to register or not.

Find out more about our VAT services

6. Do I Need to Pay Inheritance Tax?

IHT is a tax on your estate, which includes your property as well as savings, assets and more that you leave when you die. It is only paid when the value of your estate is worth over £325,000, which is called the 'nil-rate band'. Tax is paid on everything over this.

The current rate is 40% on everything over this amount. But it gets more confusing, and there are some situations where you don't pay, such as when you pass your estate to your spouse. This is why it is so important to get professional help.

Find out more about our inheritance tax services

7. What Is a Personal Allowance?

The personal allowance is the amount of money that most people can earn without paying tax. It tends to go up each year. For the 2018/19 tax year, it is £11,850. If you are in employment, it should be taken into account automatically. If you are self-employed, it will be applied when you submit your tax return.

8. What Is Capital Gains Tax?

CGT is simple in theory but can get complicated. It is usually due when you sell something valuable and make a profit. You then pay a percentage of the profit in tax.

Most people encounter it when they sell a property other than their main home. But it also applies to jewellery, shares, collectables and more. But not all possessions are liable. Isas, for example, are free from the tax.

It can be complex to work out how much you need to pay. You also have an allowance that you do not have to pay tax on. How much you pay is also based on whether you are a basic rate taxpayer or a higher rate taxpayer, and there are different rates for properties compared to other items.

Read more about CGT here

Let Us Help with Your Taxes

Don't be confused with your taxes, which can lead to problems and even penalties. Let us do the hard work for you instead. With Keith Graham, you have your own tax specialist working for you every day, so you can save time on your taxes and focus on the important task of running your business.

Read more about our tax advice and planning services