How much does a personal tax return cost?

When it comes to tax, you want to be paying as little as possible – tax that is. But for many, the cost of completing a tax return can feel like a tax in itself and you may be inclined to try and pay as little as possible. But is that a wise idea? Do you really get what you pay for? If you’ve determined that you’re required to complete a personal tax return, you’ll probably want to know in advance how much it will cost to get an accountant to help you. Here’s some guidance on typical costs for a personal tax return.

Do-it-yourself tax return

It is entirely possible for you to manage your personal tax return yourself – after all it is called self-assessment. There are various tools to assist you with this and if you’re willing to invest the time in collating all the necessary paperwork and figures and do the calculations, you can submit online, direct to HMRC yourself. But if you choose this route, it’s worth considering whether it offers an actual cost saving. If you’re taking time out of your working day to do this, what cost does that carry?

Research by consumer champions Which? Suggests that the average time taken to complete a self-assessment tax return is two-and-a-half hours. Whilst 20% claim to be able to get the job done in an hour, 10% of people say it can take in excess of 5 hours! If you consider the hourly rate of someone on £30k salary to be around £15, or £25 at £50k per annum, then the process could have a notional cost north of £125. But that’s just the cost of your time, if you charge an hourly rate for your time/work then you’ll be missing that too.

Paying an accountant or tax adviser

So, how does that notional cost compare to handing it all over to an accountant or tax adviser? In the majority of cases, you can expect to pay between £150 – £250 as standard for an accountant to complete a tax return on your behalf. Obviously, you can end up paying more for complex cases, but plenty of competition in the market and a degree of certainty in the timing and demand for personal tax work tends to keep the price stable at around the £200 mark on average.

If you work with the same adviser year after year, and your income streams remain relatively consistent then there could be savings to be agreed. The return may even form part of a wider portfolio of tax affairs and be priced accordingly.

Identify tax savings

Whilst the cost of completing your tax return is likely to sit high on your list of considerations, there are other factors that should come into play. Engaging an adviser or accountant to do your tax return for you should not be looked on as merely outsourcing the administrative work. Whilst you absolutely can complete your own personal tax return, engaging a specialist comes with additional benefits – you’re buying their skills and knowledge of the tax rules. As well as saving you the time and headache of completing it yourself, accountants and tax advisers can typically identify reductions in the tax payable or trigger reliefs that maximise the value of investments. It’s not unheard of for a good accountant to be able to reduce your tax liability by more than their fee to complete the work – now that’s excellent value.