Being your own boss is a dream for many of us, but there are some crucial steps you need to take to set yourself up as self-employed. One of the first things you need to do is register as self-employed in the UK, but how do you do this?
In this guide we’ll cover everything you need to know about how to register for self-employment, including:
- Do I need to register as self-employed?
- How to register as self-employed
- When to register as self-employed
So here’s our guide for when you’re ready to take that step and register as self-employed.
Do I need to register as self-employed?
The first question most people have at this stage is ‘do I need to register as self-employed?’ If you're working for yourself and earning money, you may need to register as self-employed in the UK. Whether you need to register depends on several factors, including your business structure, the amount of money you're earning, and your personal circumstances.
Generally, you may be considered self-employed if you:
- Run your own business
- Have multiple clients simultaneously
- Control your work schedule and methods
- Have the option to hire employees
- Take accountability for incomplete or unsatisfactory work in your own time
- Charge a fixed rate for your services that is agreed upon with the customer
- Sell goods or services for a profit, except for occasional sales of unwanted items
If you're operating as a sole trader, which is the most common way of working for yourself, and your business earns more than £1,000 in a tax year, you must register as self-employed with HM Revenue and Customs (HMRC) within three months of starting your business. You can register online on the gov.uk website.
If you're running a limited company, you don't need to register as self-employed. Instead, you need to register the company with Companies House and register for corporation tax with HMRC.
Even if you're earning less than £1,000 per year, it's still a good idea to register as self-employed, as it will ensure that you're paying the right amount of tax and National Insurance contributions. In certain situations, individuals who are employed may also be required to register as self-employed.
For instance, if you have income from a side hustle self-employment that is subject to tax, you will need to register as self-employed, even if you are also employed and pay tax through the PAYE system. This income must be reported on your tax return.
Additionally, if you earn over £100,000 per year from your employment, you will need to register for Self Assessment and file a tax return.
It's also important to note that registering as self-employed comes with certain responsibilities, such as keeping accurate records of your income and expenses, submitting self-assessment tax returns, and paying tax and National Insurance contributions on time. It's a good idea to seek professional advice if you're unsure about any of these obligations.
In summary, if you're working for yourself and earning money in the UK, you may need to register as self-employed with HMRC, depending on your business structure and income. It's important to register to ensure that you're paying the correct amount of tax and National Insurance contributions and to fulfil your legal obligations as a self-employed individual.
How to register as self-employed
You’ve found out more about being self-employed now, but you are probably still wondering how to register as self-employed in the UK.
You can register as self-employed in the UK online by following these steps:
- Visit the gov.uk website and navigate to the self-employed registration page.
- Click on the "Start Now" button to begin the registration process.
- Log in or create a new Government Gateway account if you don't already have one.
- Enter your personal details, including your name, address, date of birth, and National Insurance number.
- Provide details about your self-employment, including the date you started working for yourself, your business name (if you have one), and the nature of your business activities.
- Choose whether you want to register for other taxes, such as
- VAT or the Construction Industry Scheme.
- Submit your registration.
Registering as self-employed can be more challenging for some individuals. If you or someone you are assisting is deaf, hearing-impaired, has a speech impediment, is blind or partially sighted, or English is not your first language, you can obtain assistance through gov.uk's additional needs page.
In case you are unable to register for Self Assessment and Class 2 National Insurance using the online service, there's an alternative option available. You can fill in the registration form online, print it out, and send it by post to HMRC.
It's important to note that you need to have all the required information ready beforehand, as you won't be able to save a partially completed form.
Once your registration is processed, you should receive a letter containing your Unique Taxpayer Reference (UTR) number within 10 working days (or 21 days if you're residing abroad).
Furthermore, services are accessible to those who have difficulty completing forms, processing complex information, or using the internet or phone, regardless of whether it is due to a condition such as dyslexia, anxiety or stress, or a disability.
Once you've registered as self-employed, HMRC will send you a letter containing your Unique UTR and instructions on how to set up your online self-assessment account. You'll need to use your UTR to file your tax returns and pay any tax and National Insurance contributions you owe.
It's important to note that you'll need to keep accurate records of your income and expenses and file your tax returns on time to avoid penalties and interest charges.
When to Register as Self-Employed
Another key question is when to register as self-employed. HMRC advises that you should register for self-employment as soon as possible, but there is a legal deadline to adhere to. You must register by the 5th of October following the end of the tax year in which you began your self-employment. For instance, if you started your business in July 2023, you must register with HMRC by the 5th of October 2024.
It is best not to leave your registration until the last minute. If you encounter any issues and are unable to register by the deadline, you may face a substantial tax bill. And if you fail to register in time, you could be fined.