Tax advisers vs tax accountants: which should you choose?

Paying taxes is a necessary evil for small businesses, but filing your tax returns efficiently takes time. If you lack the time or inclination, you might want to seek expert help.  

In this guide, we reveal how tax accountants and advisers can help and when to use either or both.

Key takeaways

• Tax advisers are financial experts who specialise in various areas of personal or business taxation. They focus on tax planning

• Tax accountants concentrate on processing your tax returns

• Both options are viable for small businesses and could save you money over the long term

What is a tax adviser?

There is some overlap in the services these professionals offer, such as compiling and submitting tax returns, but tax advisers differ from accountants as they tend to concentrate on advising clients on how to reduce current and future tax liabilities. They do this by examining a business’ finances and plans for growth. 

Many tax advisers specialise in fields that are relevant to small businesses, including:

• Corporation tax

• Inheritance tax

• National Insurance

• Personal tax returns

• VAT

What is a tax accountant?

A tax accountant focuses on day-to-day and annual tax liabilities. Their job is to ensure you pay what HMRC requires and not a penny more. For some small businesses, this may involve ensuring HMRC gets your return on time. For others, the relationship could be ongoing, with regular contact to discuss and review the company’s finances. 

Read more: Five tips to help you prepare for the end of the tax year

How much do tax advisers and tax accountants charge?

Tax advisers and accountants charge different rates depending on the complexity of the advice and assistance needed. For example, tackling a relatively simple self-employed tax return should cost less than something more complex, such as tax planning or auditing. It also tends to be the case that tax firms based in cities charge more than those in rural areas to cover their overheads, while advisers and accountants with vast experience, specific expertise or certain qualifications, are likely to charge more for their services.

As a rule of thumb, advisers charge more than accountants for more complex consultations, as they need to draw on their bespoke expertise. However, rates are similar for the kind of service small businesses require. For example:

• Tax accountants typically charge between £150 and £300 to assess and file a self-assessment tax return

• Tax advisers typically charge from £250 to £500 to assess and file a self-assessment tax return

Are tax advisers and tax accountants worth employing?

If you’re a sole trader with simple income streams and outgoings, perhaps not. But if you’re not familiar with tax requirements, or you simply don’t have time or inclination to wade through your business finances, these experts are probably the best option, and may even save you money in the long run. This is because:

• A tax accountant can ensure you pay no more than you need, sifting through your statements and maximising your expenses

• A tax adviser can scrutinise your current and projected accounts to find the most efficient ways to run your business from a tax perspective

How can I find the right tax accountant or tax adviser?

If you plan to use a tax accountant or tax adviser, the first thing to do is ensure they are legitimate and have a good track record. You can search review websites for the latter, but ensure you check any firm you’re considering is a member of a reputable organisation:

For accountants 

• Institute of Chartered Accountants in England and Wales

• Chartered Accountants Ireland 

• Institute of Chartered Accounts of Scotland

For tax advisers

• Chartered Institute of Taxation

• Association of Accounting Technicians

• Association of Taxation Technicians