Personal taxes are a hot-button issue presently. Over the last few years, newspapers have been peppered with tales of high profile celebrities taking advantage of ‘immoral’ tax schemes and loopholes. Is this all there is to know about careers in tax or is there more involved in being a personal tax adviser?
In this article we look at what the term personal tax encompasses and the types of job role available.
So what is personal tax?
The terms personal tax and Income Tax are used interchangeably. Income Taxes are taxes that you pay (unsurprisingly) on your income, and the term personal tax comes from the fact that it is an individual’s income that is being assessed. This sounds easy enough, until you consider the exemptions – not all types of income and not all types of people are subject to Income Tax.
Personal tax advisers need to understand the long and complex laws governing both who are taxable and what is taxable.
Reporting Income Tax
Individuals who fulfill certain criteria set out by the law are required to send a tax return each tax year to H M Revenue and Customs. The form is to include details of all taxable income received during the preceding year and details of certain expenses. This system is called ‘Self-Assessment’, as the emphasis is on people supplying the authorities with information rather than the authorities pursuing individuals. Advisers who deal mainly with completing and filing client tax returns are described as having a ‘compliance’ job, and they usually use special software to help them. The time it takes to complete a tax return depends mainly on the complexity of the client’s affairs – some returns can take many hours to compile.
At graduate level
Most personal tax advisers will start their career in a compliance role, and many remain in compliance for their entire career. Tax laws are continually changing, so although often the clients that an adviser deals with year after year will largely stay the same, the issues those clients face are likely to evolve.
As a graduate you are likely to be required to complete a qualification such as the ATT or CTA while on the job. As you become more knowledgeable you will get more involved in tax planning for your clients or move into an advisory role. An advisory role can include things like helping a client to structure his business, make use of available tax reliefs, and structure sales so as to be tax efficient.
In reality most personal tax advisers are involved with a mix of compliance and advisory work, unless they work in a very specialised team.
Tax schemes and loopholes
Tax advisers may also be involved in talking to clients about whether or not they should use convoluted schemes to avoid paying tax. Currently this is a controversial area, as many of the available schemes are being challenged by HMRC. Although this type of tax planning attracts media attention, it usually represents a very small area of a typical tax adviser’s job.
Big firm vs. small firm
Many of the top accountancy firms in the UK offer graduate programmes, internships and placements. Working and training with a big firm of accountants, especially at any of the BigFour, will give you lots of experience fast. At larger firms you are more likely to have exposure to more complicated personal tax cases, which will look excellent on your CV if you eventually decide that working for a big firm is not for you. The pace of life can be faster and exam pressure often more stressful if you chose to train at a big company, but this is not without its rewards.
Training at a small or medium-sized firm might be preferable if you would like to get involved in more than one area of tax, or if you don’t like the idea of working in a large city, where larger firms of accountants are usually based.
When applying for a job and going to interviews you should always try to find out as much about the company as possible, and think: ‘would I fit in here?’
In the long run it makes little difference where you start your career in tax, as all tax experience, in whatever guise, has merit.
Personal tax advisers may become experts in understanding the implications for different types of business structures such as partnerships, sole traders and owner-managed businesses. It is also possible within these specialisms to further specialise in different types of trades – solicitors, architects, tradespeople, property developers, etc.
Some personal tax advisers also specialise in Inheritance Taxes, Capital Taxes and Payroll or may move over to another area of tax such as Corporation Taxes or VAT.
A career in personal tax will suit anyone who is interested in both mathematics and law, as the workload requires you to be both numerate and able to understand and apply complex laws. Interestingly, the profession is veering away from the traditional ‘chained to the desk, droning voice’ stereotype, and it is becoming more important for advisers to be excellent front of house staff. Advisers make their money by being able to communicate potentially complicated ideas and strategies to their clients. A good personal tax adviser must build positive relationships with their clients, which can involve meetings, telephone calls, emails, letters and sometimes working lunches. Perhaps the clue is in the name – a personal tax adviser should ideally be a ’people person’.
The benefits of a being a personal tax adviser? A career in tax is one of the privileged professions to be both lucrative and potentially very flexible at the same time… Plus, you won’t have to pay someone else to do your tax return each year!
Use this tax calculator to see how much income tax you should or could be paying!