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Tax and Financial Planning Strategies for Self-Employed Barristers

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Tax Planning Strategies: A Jack Ross Guide

Understanding Tax for Self-Employed Barristers

Welcome to Barrister.expert, a brand division of Jack Ross Chartered Accountants. Founded in 1948, Jack Ross has served the legal community with accounting services for decades.

Becoming a self-employed barrister brings a set of unique financial planning challenges, especially when dealing with HMRC and taxation. From income tax to VAT, tax liabilities can quickly add up if not managed efficiently. That is where a combination of effective financial planning and accountancy can make a significant difference.

The Importance of Engaging an Accountant – Jack Ross Can Help 

Engaging an accountant can provide you with peace of mind and ensure your tax affairs are in order. They can guide you through the complexities of income and expenditure, helping you to identify tax deductible expenses and allowances that could reduce your tax liabilities. Founded in 1948, Jack Ross Chartered Accountants has decades of experience in dealing with the finances of the legal profession, making them experts in the field. 

Use the contact form below and one of our Jack Ross tax specialists will be in touch. 

Cashflow: The Lifeblood of Your Chamber

Managing cashflow effectively is essential for any self-employed barrister. From chamber fees to professional subscriptions, the outgoings can be substantial. Financial planning helps you keep track of these expenditures and understand how they impact your overall business finances.

Key Tax Terms: Deductible, Allowance, and Turnover

  • Deductible: An expense that can be subtracted from your income to reduce your taxable income. For barristers, common deductible expenses include travel costs incurred for court appearances and chamber fees.
  • Allowance: Certain tax reliefs and allowances can be claimed to reduce your overall tax liabilities, such as the annual investment allowance for business equipment.
  • Turnover: This refers to the total income generated by your practice. It is crucial for determining your VAT responsibilities and other tax-related obligations.

By understanding these key terms and keeping abreast of HMRC requirements, you set the foundation for effective tax planning and financial management.

Deductions and Allowances for Self-Employed Barristers

The Scope of Tax-Deductible Expenses

For self-employed barristers, understanding what is deductible is a crucial aspect of tax planning. Expenses incurred exclusively in the course of your trade as a barrister can generally be deducted in calculating your business profits. These may include:

  • Chamber Fees: Standard for many barristers, these are a significant part of the operating costs.
  • Travel Expenses: Costs incurred for commuting from home to chambers, court, and visiting clients can be deductible.
  • Professional Subscriptions: Fees paid to legal organisations or publications can also be claimed.
  • Equipment: If you purchase equipment for business use, you can claim the annual investment allowance.

Maximising Allowances: The Pension Route

Pensions offer another avenue for tax-efficient financial planning. Contributions to a pension scheme can often be deducted from your income, reducing your overall taxation. Given the variable income levels that self-employed barristers can experience, pension contributions also serve as a form of long-term financial planning.

The Role of an Accountant in Deductions and Allowances

An accountancy firm like Jack Ross Chartered Accountants can play a pivotal role in identifying which expenses are allowable as a deduction. They can also guide you through the allowances available to self-employed barristers, ensuring you take full advantage of tax reliefs.

Understanding deductions and allowances sets the groundwork for savvy tax planning. As a self-employed barrister, keeping track of these can help you mitigate your tax liabilities and improve your cashflow.

Sofia Carlini
25/04/2023

The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team.

Katrien Vanassche
20/04/2023

Very good service from the Jack Ross Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.

Dan Gazzard
25/02/2022

Brilliant service from the Jack Ross team in setting up several companies in very quick time, along with providing associated accountancy advice. Can recommend wholeheartedly as a leading accountancy practice with a can-do attitude.

Daniel Connolly
11/01/2022

First class service for many years from a first class team. Highly recommended. Prompt, commercially aware, personable.

Marc Hourigan
11/01/2022

Been using Jack Ross for a number of years. Good clear advice and nice people to do business with.

aj shelton
22/12/2021

Jack Ross is based in Manchester and provides tax planning and Xero accounts. They are a long-standing and well-regarded firm with an excellent reputation. They provide their clients with exceptional service and a wealth of advice. I have no hesitation in using their professional services.

A Morris
14/01/2021
Joanne Leach
29/06/2020
Karen Openshaw
14/05/2020

Jack Ross has been my accountants since I set up my business in 2016. From the outset I was helped with advice, support and encouragement. I cannot commend them highly enough. Always on hand to answer any question and responsive to any changes in the economy which might concern their clients. I don’t have to worry about the financial side of my business as all of that is taken care of and dealt with by Umar and the brilliant team. If you are looking for a top class accountancy firm which maintains the personal touch they are for you!

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16/11/2019

I would recommend this account, knowledgable and helpful

J
13/08/2018

I can confidently recommend Jack Ross Accountants. They are continually improving their service, greatly benefiting our company as well as me personally. The team at Jack Ross have helped suggest and set up innovative accounting software, adding training and support. This alone has been a massive step towards having more control and understanding of our company finances.

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09/08/2018

We have enjoyed a solid and constructive relationship with JackRoss and Can highly recommend them for accountancy services.

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09/08/2018

We have been working with Jack Ross for over two years and the service has been fantastic. They have a great and knowledgable team who have taken good care of us and our accounts.

Moray Newberry
08/08/2018

Meeting to review annual accounts and discuss future plans. Very productive as they definitely talk my language - on reflection probably the best such meeting in recent years. Many thanks Umar and Jamie

Paul Medcalfe
04/06/2018

Jack Ross has serviced my Personal Tax requirements for the last 5 years. During some complicated challenges their advice was excellent and the customer service second to none and left me with no doubt all was in hand.

stevewright96
23/05/2018

Following a recommendation, I have used Jack Ross for all my accounting needs (including payroll) since the inception of my business over 12 years ago. The relationship has been completely hassle free and I greatly value their service, which goes well beyond preparation of accounts. Their tax planning advice has been really helpful and I have always felt that they have ‘got my back’. Can’t recommend them enough.

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22/03/2018

We have finally found the Accountancy firm that we have been looking for! We switched over to Jack Ross towards the end of last year and from the very first contact to the recent submission of our end of year accounts the service provided has been fantastic and has easily exceeded our expectations. Thank you!

Paul Clark
29/09/2017

Excellent service; very helpful people and work done much quicker than I expected.

Benjamin
22/02/2017

I have used Jack Ross as my accountants for a number of years. Their service is professional and accurate. They deal with queries promptly and I can always get hold of the person I need to speak to. Their digital product has made a big difference to the efficiency of my business. I would not hesitate to recommend them.

Rob Cowan
22/02/2017

Jack Ross have been my family and business accountants and financial advisors for over 50 years. The delivery of services is second to none and i would recommend them to anyone. We have also built up great friendships over the years, above and beyond that of a normal business relationship which i value greatly.

Fee Munshi
16/02/2017

We have been looked after by jack Ross for a number of years. They have given us fantastic tax advise and helped our company grow from strength to strength. A & f

Jonathan Foxcroft
14/02/2017

Excellent advice and an understandable explanation of a very complex area of tax and corporate law which other (so called) advisors managed to totally confuse me. Thank you.

Holly Jones
14/02/2017

I have had a relationship with Jack Ross for several years and continue to be impressed by the proactive support and diligent advice received across the breadth of the firm. Excellent at signposting.

Felix Mulderrig
11/01/2016

Jack Ross have acted for our law company for over 5 years and have been professional, prompt, and knowledgable in all aspects of our dealing with them.

VAT and Making Tax Digital for Self-Employed Barristers

Understanding VAT: A Crucial Element for Barristers

Value-added tax (VAT) is often a complex area for many self-employed barristers, especially when it comes to submitting VAT returns to HMRC. If your turnover exceeds the VAT threshold, registration for VAT becomes a legal requirement. Therefore, understanding VAT is an essential part of financial planning for barristers.

Making Tax Digital (MTD): The Digital Transformation of HMRC

In 2021, HMRC’s Making Tax Digital (MTD) programme was rolled out, changing the way self-employed barristers—and indeed, all sole practitioners—interact with HMRC. You are now required to maintain digital records and file VAT returns digitally if your turnover exceeds the VAT threshold. This is standard practice for barristers, ensuring that you are compliant with the latest tax legislation.

VAT Strategies: Cash Basis vs Accruals Basis

Self-employed barristers have the option to choose between two methods for VAT accounting: cash basis or accruals basis. The cash basis method is generally simpler and only accounts for VAT when it is actually paid or received. The accruals basis, on the other hand, accounts for VAT on the date an invoice is issued or received. Your choice between these two methods can have a significant impact on your cashflow and requires careful consideration.

Accountancy Software: A Must-Have in the Digital Age

Modern accountancy software can significantly ease the burden of VAT management. These tools not only help in maintaining digital records as per MTD requirements but also automate the process of filing VAT returns. Moreover, they can integrate seamlessly with your existing financial planning tools, making it easier to keep track of your business finances.

Visit JacRox.co, a brand division of Jack Ross Chartered Accountants, to learn more about the cloud accounting services we offer. 

The Importance of Timely VAT Payments

Late VAT payments can result in penalties from HMRC. It is crucial to include VAT payments in your financial planning to avoid these additional costs. An accountant can help you set reminders or even automate these payments to ensure you never miss a deadline.

Peace of Mind: The Ultimate Goal

Financial planning is not just about saving tax; it is about achieving peace of mind. Knowing that you have put strategies in place to minimise your tax liabilities while maximising your savings gives you the freedom to focus on your practice. This is where an accountant can truly add value, by ensuring that every aspect of your financial planning is tailored to your specific needs as a self-employed barrister.

By focusing on both short-term tactics and long-term strategies, self-employed barristers can create a comprehensive financial plan that not only meets HMRC requirements but also sets the foundation for a secure financial future. Whether it is understanding the nuances of VAT, taking advantage of allowances, or planning for retirement, the objective is to make your money work for you.

Jack Ross Chartered Accountants can help with any questions or problems you may have about your tax liabilities as a professional barrister, as well as offering comprehensive financial planning services. Use the contact form below and one of our barrister tax specialists will be in touch. 

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Self-employed barristers face unique tax challenges, including managing income tax, VAT, and chamber fees. Effective financial planning and engaging a knowledgeable accountant can help navigate these complexities.

Making Tax Digital (MTD) requires self-employed barristers to maintain digital records and submit VAT returns digitally. Adapting to MTD is crucial for compliance and can streamline financial planning.

Long-term financial planning for self-employed barristers involves maximising tax-efficient investments like pensions, understanding capital gains tax, and taking advantage of allowances such as the Annual Investment Allowance (AIA).

Professional Testimony

Charles Eastwood, Barrister,  St Johns Buildings Chambers

I would recommend Jack Ross Chartered Accountants as great leaders in the field of providing barrister accounting services.

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