Registering as Self-Employed with HMRC: A Step-by-Step Guide
Registering as self-employed in the UK with HM Revenue and Customs (HMRC) is a crucial step for anyone who wants to work for themselves in the UK. Self-employment can be a fulfilling and rewarding career choice, but it comes with a lot of responsibilities, including managing your own finances and paying taxes.
If you’re self-employed, you must register with HMRC as a ‘sole trader’ if you earned more than £1,000 before tax relief in the last tax year (6 April to 5 April). If you’ve earned £1,000 or less, you don’t need to do this. Registering as a sole trader means you’ll need to file a tax return every year, and you’ll be responsible for paying your own National Insurance contributions and income tax.
Fortunately, registering as self-employed with HMRC is a relatively straightforward process. You can register online using the government’s online registration service, which will guide you through the process step-by-step. In this article, we’ll provide a comprehensive guide to registering as self-employed with HMRC, including everything you need to know about the registration process, tax returns, and other important considerations for self-employed individuals.
Who Needs to Register as Self-Employed?
If you are working for yourself and earning more than £1,000 before tax relief in the last tax year (6 April to 5 April), you must register as self-employed with HM Revenue and Customs (HMRC). This is a legal requirement and failure to do so can result in fines and penalties.
It is important to note that even if you earn less than £1,000, you may still need to register as self-employed if you need to prove that you are self-employed or pay class 2 National Insurance on a voluntary basis.
It is also worth noting that if you are a sole trader, you will need to register as self-employed. However, if you are operating as a limited company, you will need to register for Corporation Tax instead.
Furthermore, if you are unsure whether you need to register as self-employed, it is always best to seek professional advice from an accountant or tax advisor.
How to Register as Self-Employed with HMRC
If you’re self-employed, you need to register with HM Revenue and Customs (HMRC) so that you can pay tax on your earnings. Registering as self-employed is a straightforward process that you can do online. Here’s how to do it:
- Go to the HMRC website and click on the “Register for Self Assessment” link. Under section (If you did not file a tax return last year) Follow the prompts to create a Government Gateway account if you don’t already have one.
- Once you’ve created your account, you’ll need to provide some basic information about yourself, including your name, address, and National Insurance number. You’ll also need to provide details about your self-employment, such as the type of work you do and when you started.
- After you’ve provided all the necessary information, HMRC will send you a Unique Taxpayer Reference (UTR) by post within 10 working days. You’ll need this reference number to file your tax return and pay any tax you owe.
It’s important to register as self-employed with HMRC as soon as possible after you start working for yourself. If you don’t register, you could face a penalty and may have to pay interest on any tax you owe.
Once you’ve registered as self-employed, you’ll need to file a tax return every year and pay any tax you owe by the deadline. You’ll also need to keep accurate records of your income and expenses so that you can fill in your tax return correctly. HMRC provides guidance on how to do this on its website.
If you’re unsure about any aspect of registering as self-employed or filling in your tax return, you can contact HMRC for help and advice. They have a dedicated helpline for self-employed people that you can call for assistance.
What Happens After Registering?
After registering as self-employed with HMRC, you will be responsible for calculating and paying your own tax and National Insurance contributions. You will need to keep track of your income and expenses and report this information to HMRC on your Self Assessment tax return.
If you are unsure about how to calculate your tax and National Insurance contributions, you can use HMRC’s online tax calculator or seek advice from an accountant or tax specialist.
It is important to keep accurate records of your income and expenses, as HMRC may request to see these records to verify your tax return. You should keep these records for at least five years after the tax year to which they relate.
Once you have registered as self-employed, you may also be eligible for certain tax deductions and allowances, such as the Annual Investment Allowance or the Flat Rate Scheme. These can help to reduce your tax bill and make it easier to manage your finances as a self-employed individual.
Important Deadlines to Remember
Registering as self-employed with HMRC is an important step in managing your finances. However, there are several deadlines that you need to keep in mind to avoid penalties and fines. Here are the most important deadlines to remember:
Registering as Self-Employed
If you’re self-employed, you must register with HMRC by October 5th, following the end of the tax year in which you started trading. For example, if you started trading in the 2022/23 tax year, you must register by October 5th, 2023.
Filing Your Tax Return
You must file your tax return online by January 31st, following the end of the tax year. For example, for the 2022/23 tax year, the deadline for filing your tax return is January 31st, 2024.
Paying Your Tax Bill
You must pay any tax you owe by January 31st, following the end of the tax year. If you fail to pay your tax bill on time, you may be subject to penalties and fines.
It’s important to note that the deadlines for filing your tax return and paying your tax bill are the same, so make sure you have enough time to complete both tasks before the deadline.
By keeping these deadlines in mind, you can avoid penalties and fines and stay on top of your finances as a self-employed individual.