PPRuNe Forums - View Single Post - Tax Advice please!
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Old 26th Apr 2009, 22:29
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DFC
 
Join Date: Mar 2002
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And your accountant is a legitimate expense, so will save you some tax.
No it will not save you a penny. The only thing that being an expense means is that the taxman will pay (insert your highest rate of tax here) percent of the cost. You will have to pay the rest.

Simplified Example;

You have taxable income of 1,000 and pay tax at 20%. At the end you have 800 and the tax man has 200.

You pay an accountant 100 and claim this as an expense. Now you have a taxable income of 900 so you pay 180 to the taxman and have 720 left for yourself.

Thus the accountant has cost you 80 and the taxman 20. It has saved you nothing.

Had you purchased one of the many guides plus some tax return software for a total cost of say 50. Even if you did not claim them as an expense you would be 30 better off.

The only time an expense will save you tax is when it prevents you going from the lower rate to the higher rate of tax. Not something that most flight instructors have a problem with.

Tax Calc software - there is a free version or you could spend 25 and use it to do your return.

Regards,

DFC
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