Anybody in the UK who is operating as a self employed individual must register as such with HMRC as soon as possible. You will need to register for self assessment tax returns with HMRC so that you’re earnings can be taxed accordingly, just as you would be taxed if you were part of the traditional PAYE system as an employee working for someone else. The absolute deadline for doing so is the 5th October following the end of the tax year you started your business. Our current tax year in the UK is running from 6th April 2024 and will end on the 5th April 2025. If you undertake self employed work during this time you will need to tell HMRC by 5th October 2025. You must also register for self assessment tax returns if you have earned £1,000 in self trading profits in any given tax year, even if this is your ‘side hustle’.
Of course, that’s a lot of information to take in at once, so below we’ll cover everything you need to know about how and when to register as self employed.
What Does It Mean To Be Self Employed?
As of January 2024, there are approximately 4.33 million self employed individuals in the UK – a huge % of the population – and following the COVID pandemic, experts predict further growth.
To be considered self employed you must work for yourself instead of being employed by another business and receiving a regular wage from that employer.
You’ll be in charge of the work you do and when you do it, which might sound fun to many, but it requires taking on a lot of responsibilities employers usually would – such as ensuring you pay the right tax and make the right national insurance contributions. It isn’t for the faint of heart, but it can be a rewarding path for many people.
Do I Need To Register For Self Employment?
Anybody making above £1,000 in self employed income during a tax year must register as self employed with HM Revenue & Customs so a self assessment can appear in your personal tax account, allowing you to pay taxes on the money you have earned whilst self employed.
You can register for self assessment and let them know of your self employment incredibly simply, by heading to HMRC’s online portal and entering your details. This will give you access to:
- your unique taxpayer reference number (a ten digit UTR number which helps HMRC identify you when paying your taxes)
- a range of government services
- helpful resources for individuals carrying out self employed work
- forms of support for those with additional needs
Once you’re registered you can choose how you trade – either under your own name (most popular) or under a business name of your choosing that isn’t already taken.
How Long Can You Trade Before Registering As Self Employed?
If you’re new to this you might not have even realised self employed registration was something you needed to do, but don’t worry – if you’ve just started you most likely won’t have made any mistakes just yet. You can start trading as self employed BEFORE registering with HMRC, but you will need to register if you’ve earned over £1,000 from self employed work in the current tax year, and you will need to register by the 5th October following the conclusion of the tax year in which you began trading as self employed.
Failing to do so can lead to hefty fines from HMRC that might even lead to you having to cease trading as self employed.
What Is The Deadline To Register As Self Employed With HMRC?
To be clear, registering with HMRC as soon as possible after you begin trading is absolutely HMRC’s (and our) recommendation. But the absolute deadline is the 5th October following the tax year you began trading as self employed. If you began during the 2023-2024 tax year, you’ll need to be registered with HMRC before the 5th October 2024.
Registration can take a while, as you’ll need to ensure you have filled in the form correctly and included all of the relevant information – so don’t leave it to the last minute or you might be caught short and miss the deadline. This could result in a penalty from HMRC.
Am I Able To Register As Self Employed If I Am Currently Employed?
Yes, even if you have a full or part time job with a business, if you carry out self employed work, then you will need to complete the registration process. You are legally obliged to tell HMRC when you carry out work for yourself that amounts to more than £1,000 in a tax year.
Many individuals fear a conflict of interest with their current employer, but so long as your contract doesn’t state that you can’t carry out additional work for yourself, then there should be no issue. If your contract prohibits additional work, then you’ll need to choose between self employment and staying with your current employer to avoid breach of contract or the temptation of hiding your additional income from both your employer and HMRC.
Why Should I Register As Self Employed?
You might be tempted to avoid telling HMRC about your self employment to keep as much of the money you earn to yourself, but let us be abundantly clear: this is illegal, you will be caught up with eventually, and you will face legal consequences for choosing this path.
You are legally required to register as self employed with HMRC.
But away from this, you’ll get some additional benefits:
- Access HMRC’s services and benefits.
- More motivation for business growth.
- Focus on financial tracking and appropriate budgeting.
- Comfort in knowing the proper amount of tax is being paid.
- Make your contributions to the economy.
- You will face legal consequences such as hefty fines if you fail to register.
How To Start A Business In The UK
To start a business you need to consider the legal requirements and the process you have to follow in order to trade legitimately:
- register business name with Companies House
- get any licenses or permits your business requires to trade
- set up a business bank account
- get familiar with taxes and filing deadlines
- seek any government grants for new start up businesses
Follow these steps and you ought to start your business on the right foot.
Do I Need To Register My Business?
Anybody running their own business must have it registered with HMRC – just as self employed individuals must. Again, the 5th October deadline following the end of the tax year applies for businesses registering with HMRC. You’ll need to provide your personal information and national insurance number, and your business details too.
Registering with HMRC will also mean regular notifications about upcoming deadlines, so you never miss a tax deadline again.
Should I Register As A Sole Trader Or A Limited Company?
The majority of UK individuals working for themselves will do so as Sole Traders. It’s the most straightforward way of registering with HMRC and keeps you in full control – but it also means you alone are liable for any debts your business incurs.
Registering as a limited company is more complex, as you’ll need to register your company and register yourself as an employee too – essentially you’ll be responsible for filing company accounts and your personal accounts – however you will be seen as a separate entity to your business, so any debts are your business’ and not yours, so your personal assets are protected.
Other Responsibilities Of Being Self Employed In The UK
One of your biggest responsibilities is paying your National Insurance Contributions. This is a legal tax requirement – most self employed individuals pay Class 2 NIC, but you may also need to make Class 4 NIC – check with HMRC to be sure.
Submitting your self assessment is another huge responsibility. It’s how your tax bill is calculated and how you record your business income, expenses, transactions and more. All self assessments are due by the 31st January following the end of the tax year. That means the 2023-2024 tax year self assessment will need to be submitted by the 31st January 2025.
Where annual turnover is over £90,000 (as of the 2024-2025 tax year – previously £85,000 in other tax years), then you’ll need to ensure your business is VAT registered.
Taking responsibility for your taxes and any related deadlines is of vital importance as a business owner or self employed individual.
Is There An Earning Threshold For Registering As Self Employed?
Yes. Earning over £1,000 from self employment in any given tax year means you must register and submit a self assessment. You won’t start paying tax until you’re earning £12,750 per year, but you may need to make national insurance contributions for earnings below this threshold anyway so registering is a requirement.
What Insurance Do I Need After Registering As Self Employed?
There is no one-size-fits-all here. You’ll need to ensure you are insured adequately for your line of work to protect yourself and your customers and reduce any liability. If you employ other people at your business, then you may need to take out additional insurance.
You might also consider insuring certain assets to protect your business interests. Depending on your industry, there may be certain legally required insurances you must have in place to responsibly carry out work – such as public liability or professional indemnity insurance.
Do your research, and ensure you are fully compliant with any insurance requirements.
What Do I Do Once I Have Registered As Self Employed?
After officially registering, you can begin trading and start bringing your customers to you and making a success of your new endeavour.
Make sure you have an efficient system in place for recording income and expenses so you’re ready for your first self assessment tax return and keep as many records as possible to protect yourself in the future.
How Do I Register For Benefits If I Am Self Employed?
Many people see self employment as something of a barrier to benefits, but it doesn’t have to be. Admittedly, it is more difficult than if you were employed by somebody else and had a regular, guaranteed income that you could show to the relevant agencies to gain access to the support you need – but you can still claim benefits whilst self employed.
Talk with your local council and let them know your financial situation. They’ll be able to discuss with you any benefits you might qualify for.
If one of the main benefits you’re worrying about is maternity pay and leave, don’t worry – there is something known as maternity allowance available for expectant and new mothers who can’t continue their self employed work due to their pregnancy or newborn.
Start first by talking with your local council directly, and they’ll point you in the direction of any benefits you’re entitled to.
Summary
You must register as self employed by the 5th October following the end of the tax year you became self employed and started your own business. Failing to do so could mean you avoid paying the right amount of tax, and if HMRC were to find out that you were trading without being registered, then you might face a large fine.
Self employed people will then need to file their self assessment return every year, submitting it by the 31st January following the end of the tax year. Payment of any tax due must also be made by 31st January – so if you file your self assessment on the last possible day, you’ll need to pay your tax then, too.
Being self employed comes with countless benefits, but with those benefits comes a range of responsibilities. Knowing your deadlines and keeping accurate financial records are just two of many. But for those organised enough to take on self employment, the rewards are endless.
