15% of working people in the UK are registered as self-employed. This article will tell you how to register with HMRC and join this growing group of self-made sole-traders.
Who should register as self-employed?
‘Self-employed’ is a wide spectrum, including people who describe themselves as freelancers, sole traders, and even small businesses.
Although self-employed people call themselves different things, they have some key points in common. All self-employed people work for themselves, handle their own taxes and do not have any employees of their own. They are likely to work for multiple clients flexibly, rather than working for one organisation according to a rigid contract.
If this sounds like you, it’s likely you should be registered as self-employed. This is especially important if your self-employed business has already been trading for some time, as HMRC stipulates that self-employed people must register by October 5th on their second year of trading; otherwise, they may need to pay a penalty.
You may have some doubts over whether your work counts as self-employment. If that’s the case, use the ‘Check employment status for tax’ tool at Gov.uk to find the answer.
Those of you who intend to employ other people part-time or full-time should set up as a limited company, rather than registering as self-employed. This approach enables entrepreneurs to scale up their business and reduce their personal national insurance (NI) contributions. To set up a limited company, one of your first steps should be to ‘register the business with Companies House.’
How to register as self-employed in the UK: step-by-step
Registering as self-employed can seem like a daunting process – but you may find it simpler than you expected. Here’s how to register, step-by-step:
- Submit your email address to HMRC’s Government Gateway via ‘this webpage’. The service will then send a security code, which you can use to verify your identity.
- You will be asked to supply some basic personal information, including your address.
- HMRC sends a letter containing your ten-digit unique taxpayer reference (UTR). Allow ten working days for the letter to arrive, or 21 days if you are abroad.
- Meanwhile, HMRC sets you up with a Self Assessment account, which you will be able to use to submit your tax returns. HMRC will issue you with an activation code, which you can use to access this account for the first time.
- Log-in to your Self Assessment account and add your details.
And that’s it! Once you have successfully completed these five steps, you will be registered as self-employed with HMRC. You will now be able to manage your tax returns via your online Self-Assessment account, and receive communications from HMRC via post, text and email.
Other things to bear in mind
During the self-employed registration process, HMRC will ask for various details about you and your business, including:
• Your business name. While some self-employed people trade under their own name, others choose an alternative business name to appeal to their clients/customers. Check out our guide on how to choose a business name for inspiration.
• Your business telephone number. Getting a dedicated business telephone number is a great way to separate your private and professional lives as a self-employed person. Tamar Telecommunications can help you get set up.
• Your business address. Will your business trade or receive mail at an alternative address to your home address? You may find it more efficient to receive HMRC communications at a dedicated work address, whether that means your own business premises or a virtual office with a mail service.
It makes sense to get these specifics set in stone before you register with HMRC, though you can always update them as required via your Government Gateway account.
Need help registering as self-employed?
The best way to get help with registering as self-employed is to contact HMRC by phone:
• Telephone: 0300 200 3310
• Textphone: 0300 200 3319
• Outside UK: +44 161 931 9070
The helplines are open from 0800-2000 Monday to Friday, 0900-1600 on Saturdays. They are closed on Sundays.
Bear in mind that your wait time will vary depending on when you call. Research by the tax insurer PfP indicates the best times to call are between 0830 and 0930, or between 1200 and 1230.
Now you know how to register as self-employed in the UK, you can get started straight away! If you’re still in the process of setting up your business, this article may help: 5 things to do before you start your own business.