Self Employment and Registering with HMRC
This video provides an overview of Self Employment and registering with HMRC. It is based on information obtained from the HMRC web site https://www.gov.uk/working-for-yourself
If you start working for yourself, you are classed as a sole trader. This means you are self-employed – even if you have not yet told HM Revenue and Customs (HMRC).
You are probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit (including through websites or apps)
You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings. You can check whether you’re self-employed either online or by telephoning HMRC.
Selling Goods or Services
You could be classed as a trader if you sell goods or services. If you are trading, you are self-employed. You re likely to be trading if you:
- sell regularly to make a profit
- make items to sell for profit
- sell online, at car boot sales or through classified adverts on a regular basis
- earn commission from selling goods for other people
- are paid for a service you provide
You are probably not trading if you sell some unwanted items occasionally or you do not plan to make a profit. You cannot use any losses you make as part of a hobby to reduce your tax bill. Contact HMRC for advice if you are not sure whether you are trading.
What you need to do
You will need to register as self-employed to make sure you pay the correct Income Tax and National Insurance. You must also follow certain rules on running and naming your business.
Registering with HMRC if you start Self Employment
You need to register for Self Assessment and Class 2 National Insurance if you’ll earn more than £1,000 from self-employment between 6th April 2017 and 5th April 2018. You still need to do this if you have sent a tax return before. Register by 5th October in your business’s second tax year. You could be fined if you do not.
If you have submitted a tax return before
You should Register online (form CWF1). You will need to find your 10 digit Unique Taxpayer Reference (UTR) from when you registered for Self Assessment previously. If you have signed up for the online service before, you should use the same account to file your tax return.
If you have not submitted a tax return before
Register online with HMRC and you will:
- receive a letter with your 10-digit Unique Taxpayer Reference (UTR)
- be enrolled for the Self Assessment online service at the same time
You will also receive a letter within 10 working days (21 days if you are abroad) with an activation code. This will be needed when you first log in to your online account. You can replace an activation code if you do not receive it or you lose it.
For further information on self employment and registering with HMRC, please contact Stallion Accountancy Services.