Personal Tax Services in Manchester
Managing personal tax can be complex, but with the help of Quay Accountants, you can ensure your tax affairs are handled accurately and efficiently. Our personal tax service is designed to save you time, keep you compliant and minimise your liability.
What is personal tax?
‘Personal tax’ refers to the tax owed by an individual on any income, capital gains or inheritance they receive. It includes tax on salary, savings, pensions, dividends and other sources of income. It’s essential to understand your personal tax position in order to plan for what you owe and remain compliant with HMRC.
What taxes are included within ‘personal tax’?
You will pay tax on money earned from your income, savings, pensions and various other benefits. Some of the main taxes which go on a personal tax return are:
As a worker in the UK, you pay income tax through the PAYE scheme if you are employed by a company. Self-employed people are responsible for their own income tax compliance and must use the self-assessment system to submit an annual return to HMRC.
Everyone is entitled to a tax-free amount of earnings up to a certain threshold, which is currently £12,570. This is called a personal allowance. Anything earnt over the threshold will be subject to tax. The basic rate of income tax is 20% as of 2023.
In addition to income tax, self-employed individuals also need to make National Insurance Contributions (NICs). If you earn under the Small Profits Threshold of £11,908 from your self-employed income, you won’t be liable for Class 2 NICs. If your profits are over this amount, Class 2 NICs are £3.15 per week.
Class 4 NICs are also paid by self-employed individuals in addition to Class 2 NICs. However, these are only paid if your profits are over the Lower Profits Limit of £11,909. Class 4 NICs are calculated at 9.73% of profits above the Lower Profits Limit.
Shareholders are able to take their share of the company’s profits as dividends. Each shareholder is entitled to a dividend allowance of £2,000 (for 23/24, this is £1,000 per shareholder), and any dividends paid over this allowance are taxed at the various different dividend rates depending on an individual’s tax band.
The current dividend tax rates are:
8.75% for basic rate tax payers
33.75% for higher rate tax payers
39.35% for additional rate tax payers
Capital Gains Tax (CGT)
Capital Gains Tax is paid on any profits made when disposing of an asset valued at more than £6,000. This excludes your car and main residence, but includes second properties, shares or valuable items such as antiques. The rate of CGT is determined by your income tax band, ranging from 10% to 28%.
You only pay CGT on your gain, i.e. the difference between the purchase and sale price. The tax-free allowance for capital gains is currently £12,300. Capital Gains Tax planning is essential to understand the financial impact of any large transaction on your business and personal finances.
Inheritance tax is paid on any money or assets inherited from someone who has died. It is currently set at 40% payable on assets above £325,000 or (£650,000 for a couple). Inheritance tax must be paid within 6 months of the date of death and is typically paid out of the person’s estate.
What is personal tax planning?
Personal tax planning simply refers to the process of making accurate financial records from which to forecast your tax liabilities in advance of your returns to HMRC. The goal is to ensure you have funds available to meet your obligations and also to take advantage of any tax reliefs you could be entitled to. You can, of course, do that on your own, but it is far easier with the help of a knowledgeable accountant.
Working with an accountant on tax planning offers three big wins:
You can save a lot of time and stress
You will stay compliant with HMRC regulations and avoid costly errors
Your accountant can identify valuable tax reliefs that could reduce the amount of personal tax you owe
At Quay Accountants, we provide tax advice to individuals and company owners, helping them to manage and minimise their personal tax liability. To find out how we can help you with tax planning, please contact us today.
Our personal tax planning services in Manchester
To manage your personal tax affairs successfully first relies on a good understanding of UK tax rules and regulations. It also entails keeping accurate accounting records and filing tax returns on time.
An accountant can do all of this for you and provide valuable personal tax advice. This will not only save you time but help you to forecast your tax bill more accurately, remain compliant, plan tax-efficient investments/disposals and identify tax reliefs that may be available.
When you are self-employed, it’s essential to stay on top of your accounts in order to plan for your income tax bill. If you don’t, your self-assessment tax return may be very stressful, and you could find yourself with a large tax bill you can’t pay.
An accountant can help you to stay in control of your finances with services like bookkeeping to ensure you plan ahead for your personal tax return with no nasty surprises.
Any savings above your Personal Savings Allowance (PSA) incurs tax on the interest, the rate of which correlates with your income tax band. The PSA for basic rate taxpayers is £1,000.
There are products available, such as Individual Savings Accounts (ISAs), with a far greater tax-free allowance. Your accountant can advise you on the best personal saving solution, depending on your circumstances and goals.
If you are an individual investing in a second property, then it is important to understand the tax implications. Stamp Duty Land Tax (SDLT) must be paid on purchasing property above £250,000, with a 3% surcharge if that property is not your main residence.
There are SDLT reliefs available, such as for first-time buyers. The rules on eligibility for these reliefs can be complex, so it’s wise to consult a financial expert such as your accountant.
Few people are comfortable talking about the inevitable, but in order to ensure your loved ones are taken care of, it’s important to plan how to leave your estate.
An accountant can help you understand your exposure to Inheritance Tax and plan the most tax-efficient way to manage your estate. They can also identify valuable tax savings that could further secure your family’s future.
How can Quay Accounting help you with tax planning?
Our personal tax team can help you understand your tax liability and take the hassle out of liaising with HMRC. They will also identify available tax reliefs, help to forecast your tax bill accurately and plan tax-efficient investments.
Personal Tax - Frequently Asked Questions
Does HMRC give tax advice?
While there is lots of information about personal tax on the gov.uk website, HMRC does not provide tax advice directly to individuals or companies. That is why it is very valuable for anyone earning an independent source of income to consult a professional accountant.
What is an ISA?
An ISA is an Individual Savings Account and offers a very tax-efficient way of saving, as there is no tax to pay on the interest below your personal savings allowance. This is currently £20,000 for basic rate taxpayers, which is much more generous than the £1,000 PSA on regular savings accounts.
Contact Us Today
Whether you are local to Manchester or based further afield, we can ensure that your tax returns are submitted correctly and with no penalties incurred. Plus with our many decades of experience our expert team of Chartered Accountants allows us to offer a dedicated self-assessment service so that we can handle even the most complex cases on your behalf.
To find out more about then services we offer, get in touch with our tax return accountants today!