Reading practice with the useful words

As a freelance English Language Teacher, I am registered with the Tax Office as self-employed. This is the opposite of being an employee who is employed by a company (employer).

In the UK, an employee’s income is taxed at the source which means that their employer deducts tax from their gross salary and pays the tax on their behalf. What they receive in their payslip is the net monthly salary. So, gross is before tax and net is after tax. When I refer to tax, I mean income tax.

By contrast, a self-employed person receives gross income. My clients pay my fees after I send them an invoice. The money I receive is gross and has not been taxed. What I have to do is add up all the income I have received in the year and calculate the tax that I have to pay on my annual income.

Before calculating the tax, I can take into account any business expenses I have incurred during the year and deduct them from my income. I also have a personal tax allowance that I can apply to my gross income. A personal allowance is an amount each individual can earn in a year free of tax. For example, the first £10,000 I earn this tax year will be tax-free! 

I have a tax accountant who helps me with my annual tax returns. What he does is to find out what allowances I can claim, what expenses I can deduct from my income and finally, he calculates the tax I have to pay. What I need to do is to prepare all the necessary paperwork he needs to do his job.

So, I need to keep all relevant receipts and print off all my invoices and bills. I then have to prepare an Excel spreadsheet that shows very clearly all the income and expenses I have incurred each month under different sub-headings. I have to number all the receipts so that my accountant can tick them off against each entry.
As you can imagine, this is an extremely time-consuming and boring task! If I were super organized, I would do this task at the end of each month instead of wasting nearly a week at the end of the tax year getting everything ready!  

After my accountant has done the calculations, he sends me my accounts for my approval. Once I have approved them by signing them off, he completes and submits the tax return online. I will then receive notification from the Tax Office confirming receipt of my return and they will inform me when I have to pay the tax owed.

I am so relieved I have completed all the paperwork and finally sent my tax return to my accountant. I can now concentrate on doing much more fun things – until I receive my tax bill, of course!