Registering as self-employed with HMRC

If you’ve taken the big decision to become self-employed there are some compliance issues you will need to have covered. One of the first is registering yourself as self-employed with HMRC. Nicola Roby, Director at CHW Small Business Accountants Bolton explains how to register with HMRC.

Firstly, check your work qualifies as self-employment using the Employment Status Indicator on HMRC website.

You are likely to be considered self-employed if you:

  • run the business yourself
  • have more than one customer at the same time
  • make your own decisions about when and how you work
  • can hire other people
  • provide your own tools and equipment
  • set your own prices for your work, agreed with your client or customer
  • sell goods or services for a profit, rather than just selling unwanted items on an ad hoc basis.

If you meet these criteria, you will probably need to register as self-employed.

Now, you will need to register as self-employed with HMRC

This is a reasonably easy task. Before you can register you require a Government Gateway account which will allow you access to the Government’s range of online services, the most important of which is HMRC’s self-assessment portal. You can request your Government Gateway details on the HMRC website and these are then sent to you by post.

Once you receive these, you have 90 days to use the login details for the first time. Once you’ve done that, return to the HMRC website to provide some basic details about yourself and your business, including contact details and nature of your work.

You will need to decide on a name for your business at this stage and it is important you do an online search to ensure that there are no existing businesses with the same name.

HMRC say that whilst you should register as self-employed at the earliest opportunity, there is also a deadline. Legally you must register by the 5th October of your business’s second trading year.

However, it is not advisable to leave registration until this date because if anything goes wrong and you’re unable to register by the deadline, you could find yourself with a large tax bill and penalties.

Your ongoing responsibilities

After you are registered you will have certain ongoing legal obligations.

Most importantly, you must keep adequate records, particularly of your business income and expenses. No later than 31 January every year, you must file your self-assessment tax return. If you owe tax, you will need to make payments to HMRC on 31 January and 31 July, although you may be eligible to spread these payments with the agreement of HMRC. In addition to income tax, you’ll have to pay Class 2 and Class 4 National Insurance Contributions.

VAT

If your annual turnover exceeds the VAT threshold, which is £85,000 for the 2018-19 tax year, you will also need to register for VAT. Although, you can choose to register even if your turnover is below this level and depending on the circumstances of your business this may or may not be right for you.

Many people choose to get expert advice from an accountant in this area to ensure they are fully compliant and to free up their own time so they can concentrate on actually running their business! If you require any further advice regarding self-employment please contact Nicola Roby at CHW Small Business Accountants Bolton on 01204 534031 or via our contact us page.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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