To answer right away, self-employed individuals need to register with HMRC by the 5th of October following the end of the tax year that you started your business. This is to begin submitting self-assessment tax returns. Taxes must be paid through this tax return system as opposed to the traditional PAYE system, regardless of whether or not your self-employment is your full-time job or simply a side hustle.
But what are the exact deadlines? In this article, we outline the timeline, as well as how to register, the consequences for not doing so and more.
What counts as self-employed?
You do not have to commit to the self-employment register until you earn above £1,000 yearly through non-employment. If you earn anything below this, then you don’t need to register as self-employed – so keep an eye on your income, and prepare yourself when you begin to reach the £1,000.
It’s also possible that HMRC themselves will contact you, asking you to register as self-employed, if they suspect undeclared income through third party data or your national insurance number. This is because your national insurance number is tracked by HMRC, and undeclared income can raise alarm bells.
Working for yourself means working out your own income tax, national insurance contributions and VAT via self-assessment tax returns. It is not done automatically like it would be if you were an employee.
Where do I find the self-employment register?
You can register as self-employed through your government gateway account, which you can create by heading to HMRC’s online portal and entering your details. This will give you access to:
- Unique taxpayer reference – Your unique taxpayer reference number (a ten digit UTR number which helps HMRC identify you when paying your taxes).
- Business tax account – Gives access to a range of government services, such as the self-assessment tax return.
- Benefits – Benefits are listed here, and can be applied for easily.
- Resources – HMRC’s online services allow sole traders access to a host of helpful resources.
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.
What is the time frame for registering as self-employed?
All tax years run from the 6th of April one year to the 5th of April the following year. Whatever tax year you hit £1,000 annually in, you’ll have until the 5th of October to register 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.
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.
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. Some contracts prohibit additional work, especially if it’s competitive. Whilst your employer will not be informed, beware that there could be consequences beyond dismissal (such as injunctions, fines, etc).
Do I Need To Register as a Business?
No. Whilst you can create your own business with its own name under HMRC, you can just as easily operate under your legal name.
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.
Truth is – limited companies are only truly viable for at least medium-sized businesses due to the extra administration work etc.
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 pay 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 of January, following the end of the tax year. That means the 2024-2025 tax year self-assessment will need to be submitted by the 31st of January 2026.
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 adequately insured 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.
Start first by talking with your local council directly, and they’ll point you in the direction of any benefits you’re entitled to.
Conclusion
You must register as self-employed by the 5th of October following the end of the tax year you became self-employed and started your own business. HMRC keeps a close eye on your national insurance record for changes, and it’s better you file before they ask you to.
A self-employed person has 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.
