Find out how to register for self-employed below. If you own a business or earn any extra income that’s not from your employer you will need to register for self-employed. To register you will need to visit the HMRC website. The sign up process will take around 20 minute and you will need to provide personal information such as your National Insurance Number.
Website Application – Click Here
Self-Employed Helpline Number – 0300 200 3504
Once you have signed up you will be given a Government Gateway Account. Your account details will be sent to your address via post, it will include log in details such as your Unique Tax Reference (UTR). In this account you will be able to see your pervious tax returns, pay tax owed and submit a tax return. It’s important to take notes of all your reference numbers as you go along, as you will need these when signing in.
Examples of when you need to register;
- Own a business
- Have rental properties
- Sell items regularly for profit (eBay, Car boot sales)
The financial year runs from the 6th of April to the 5th of April. You are required to submit your self-employed tax return by the end of January the following year. For example the tax return you submitted in January 2018 is made up of sales and expenses from April the 6th 2016 to April the 5th 2017. Its important to keep good records of your income, you will be required to keep up to 7 years of accounts. Failing to register may lead to prosecution and you may have to pay a lot more tax. Interest is added onto unpaid tax. We always recommend calling the HMRC to ask any questions you have, you don’t want to end up with a hefty tax bill.
Business owner requirements
As a business owner your tax is not automatically taken out of you sales. Your Tax will be taken out when you submit your self-assessment. It’s important to keep a record of all your sales and business expenses during the financial year. Not only will it make your tax return easier but you will need to provide evidence of your records if you where investigated by the HMRC. So make sure your organized and they are kept in a safe place! We would recommend getting a few quotes from your local accountants. Having an accountant will ensure your return is done correctly and you more often than not they will save you money.
Earn extra money you earn on the side and investments
Income such as rent from properties and extra income you earn from a side business must be accounted for. In recent years the HMRC has been targeting lower amounts of extra income, they aren’t just going for the big tax avoiders. For example if you sell items on eBay regularly you will have to register. You will have to pay tax on any profit you make from your investments or sales.
What business expenses can I claim?
Being self employed you must take notes of all the expenses your business has incurred. In basic terms a business expense is any money you have spend on your business to keep it running. Its important to keep good records as you can claim expenses against your income to reduce your tax bill. You will need to keep a record of your business expenses for up to 7 years so keep them somewhere safe! You will need to show evidence of your expenses to the HMRC if they decide to investigate you. We would recommend getting an accountant, they will make sure you have claimed everything you can. Furthermore they will ensure you have recorded them properly.
Below are examples of business expences you can claim for
- Estate agent fees
- Accountant fees
- Shop fixtures
- Landry bill
- Insurance costs
- Utility bills
- Vehicles (Must be commercial for example a van)
- Phone bill
- Advertising costs
- Website costs
- Postage costs
- Shop appliances
If you work form home you are able to claim extra expenses. There are 2 ways you can claim and they are called Flat rate and Percentage.
Flat rate is a simplified way of calculation your expense amount. Flat rate can only be used if you work more than 25 hours a month at home. You don’t have to provide evidence, which is a big bonus. This option does not include phone bills and Internet expenses; this can be claimed on top of the flat rate using the percentage rate. You can claim the following for working at home
- £10 a month if you work between 25 & 50 hours.
- £18 a month if you work between 51 & 100 hours.
- £26 if you work over 101 hours.
Percentage rate is the recommended way if you use part of your home solely for your business, for example an office or work shed. To use this method you would have to work out the percentage of your home that is used for your business. For example you have 4 rooms in your house and 1 is used solely for your business, in this example you can claim 25%. You would be then able to claim 25% of all your home expenses such as rent and utility bills.
I forgot to add an expense. Can I adjust my tax return after I have submitted it?
Do not worry, you can log into your self-assessment Government Gateway Account and make the adjustment.
Self-Employed National Insurance Rates
There are 2 types of self-employed National Insurance rates. You will need to pay Class 2 National Insurance on all profits between £6,205 and £8,424. If your profits are above £8,424 you will need to pay Class 4 National Insurance. Class 2 National Insurance is £2.95 a week. Class 4 is 9% on profits between £8,424 and £46,350 and then 2% on profits over £46,350.
For example if your profit is £7,000 a year you will be have to pay Class 2, which would work out at £153.40. If you profit where to be £20,000 you would need to pay both class 2 and 4. Your total National Insurance payment on £20,000 would be £1,041.84 Class 4 plus the Class 2 payment of £153.40. You would not have to pay any National Insurance Tax on any profit amount under £6,205.
National Insurance will be taken out and calculated automatically when you submit your yearly tax return.