If you have recently embarked on a self-employment journey, it is imperative that you take the necessary steps to register yourself as a self-employed individual with HMRC in order to fulfill your tax obligations. Please be advised that the deadline for registration is 5th October.
Fortunately, the registration process is relatively simple and straightforward. It is a one-time requirement that encompasses both income tax and National Insurance contributions (NIC). By promptly completing the registration process, you can ensure compliance with the relevant tax regulations and avoid any potential penalties or repercussions.
If It is my first time registering as self-employed!If you haven’t registered as self-employed before, then follow these step-by-step instructions:
· Register online by creating a HMRC online account
· You’ll receive a user ID
· Log back into the HMRC online account, select “add a tax”, and then “Self Assessment”
· Select “Sole Trader” from the options: individual, sole trader, partnership, or trust
· Enter the date you started your self-employment
· Submit more details, including your National Insurance Number (here’s how to get one)
· Describe the work you do: “security guard”, “Uber driver”, “freelance designer”, etc
· Review and click “submit”
· You’ll get a letter with your Unique Taxpayer Reference (UTR) number by post
· You’ll also receive another letter within 10 working days with an activation code. You’ll need this code to activate your UTR
· You can also do this using the SA1 form: you can download it on HMRC’s website, fill it in, and send it by post. Bear in mind, this method takes additional time to reach HMRC.
If you’re employed
There are some cases when employed people will also have to register as self-employed.
For example: If you’re employed but also have taxable income from self-employment, you’ll still need to register as self-employed. Although your employed wages are taxed through PAYE, you’ll still need to report this income on your tax return.If you’re employed but earn over £100,000 a year from your job, you will also need to register for Self Assessment and file a tax return.
What to do after you’ve registered
Now you’ve successfully registered for Self-Assessment, make sure you:
· Keep track of your invoices and receipts
· Pay tax and completing a Self-Assessment tax return by January 31st every year
· Pay class 2 National Insurance Contributions (NICs)
· Pay class 4 National Insurance Contributions if necessary!
· Register for VAT if you’re making £85,000 or more from self-employment
When registering for self-employment, you’re automatically enrolled into what is known as Payment on Accounts.
If you want to stop being self-employed
You will need to tell HMRC – here is how you do it. HMRC will still expect you to file a tax return otherwise.
HMRC also have e-learning packages available online and run regular webinars which you can join to help you to get started when self-employed.