If you start working for yourself, you’re
classed as a self-employed sole trader, and this video will show you how to register as
a self-employed person with HM Revenue and Customs. If you’re setting up a partnership
or limited company, then please refer to the guidance on the GOV.UK website which will
tell you what you need to do. When you start working for yourself you must
register as self-employed with HM Revenue and Customs. This is to make sure you pay
the right amount of Income Tax and National Insurance.
Ok, so when do you need to register? Well, you should register as soon as you can after
starting your business. This will be when: you start to market your business (such as
issuing business cards or placing an advert in the local press);
or when you have goods or services to sell and have a customer for them – for example,
buying stock to sell on, or an eBay sale that was a one-off which is now becoming more regular.
Register on whichever date is the earlier. At the latest, you should register by 5 October
in your business’s second tax year. For example: If you start your business between
April 2015 and March 2016, then you should register before 5 October 2016.
So, how do you let HMRC know you’re working for yourself? If you haven’t sent Self Assessment
tax returns before, you can register online. Start by going to this page on the GOV.UK
website. There’s a link at the end of this video that you can use.
If you have sent Self Assessment tax returns before, you’ll need to complete form CWF1,
which you can also find on the GOV.UK website. So what happens when you register?
If you haven’t sent tax returns before, HMRC will set up an online account and register
you for Self Assessment. You’ll then be able to do your tax returns online. You’ll
be given a Unique Taxpayer Reference number, or UTR, which you’ll need if you have to
contact HMRC. It will be shown on any documents you get from HMRC. You’ll be registered
for Class 2 National Insurance contributions. And, you can register for VAT, and other business
taxes if you need to. How long will it take to register your business?
Please allow ten working days to complete the registration process. HMRC will post an activation
code to you which you’ll need when you first log into your online account (also known as
a Government Gateway account). When you work for yourself you’re responsible for paying
Income Tax on your profits; and National Insurance contributions.
As I mentioned earlier, you’ll be registered for Class 2 National Insurance when you register
your business. Class 2 contributions are calculated using
a flat weekly rate. And Class 4 contributions are paid annually as a percentage of your
taxable profits. Usually, you’ll pay Class 2 and Class 4 contributions through Self Assessment
along with your tax. You can get a lot of help and support from
HMRC. Many businesses sign up for HMRC’s tailored emails which help you understand
what you need to do and get it right first time. You’ll find information about these
emails and other ways HMRC can help you on the GOV.UK website. As well as webinars and
videos there’s E-learning on setting up and running your own business; and about business
expenses if you’re self-employed. You can now use this link to start the registration
of your business with HMRC. Thank you for watching this video.