Have you recently started working for yourself? Do you need to know how to register as self-employed? You’re in the right place.
According to HMRC, you’re considered self-employed if you run your own business and take full responsibility for its success or failure.
And as a self-employed worker, you won’t be paid through PAYE. Instead, you must pay your income tax and National Insurance contributions (NIC) via Self Assessment each year.
That last part means you need to be officially registered with HMRC. Here, we explain the registration process, step-by-step. Plus, we’ll cover when you need to register and what responsibilities you’ll have once you’re done.
How to register as self-employed with HMRC
The good news is that registering as self-employed is pretty easy, especially when you do it online. Simply visit the HMRC website to get started, then follow these steps:
- Create a Government Gateway Account. This is the account you’ll use to manage your taxes online. You’ll receive a unique 12-digit user ID and be asked to create a password.
- Next, log in using your user ID and password.
- Select “Add a tax” and then “Self Assessment (including Class 2 National Insurance contributions)”.
- Complete the registration by entering your personal information, the date you started your self-employment, and details about the type of self-employed work you do.
- HMRC will then review your application. All being well, you’ll receive your Unique Tax Reference (UTR) number in the post within ten working days. This is a 10-digit number that proves you’re registered as self-employed. You’ll need it whenever you speak to HMRC, manage your account online, and submit your tax returns.
- Finally, enter your Government Gateway activation code. This is part of the verification process for your HMRC online account. It can take up to 28 days to arrive, and it will expire, so enter it as soon as you receive it.
And that’s it! Once you’ve completed those steps, you’ll be officially registered as self-employed.
All that’s left to do is track your income and expenses, submit a tax return online, and pay your tax bill twice a year. The deadline for submitting your tax return is 31 January. And the deadlines for paying your tax bill are 31 January and 31 July.
Can I register as self-employed by phone?
Yes, you can. But it will probably take longer, depending on how busy the lines are.
If you want to register by phone, call HMRC on 0300 200 3500. Lines are open from Monday to Friday, 8 am to 8 pm, and on Saturday from 8 am to 4 pm.
What information do I need to register as self-employed?
Whether online or by phone, registering with HMRC is really straightforward. They’ll guide you through every part of the process, and there are plenty of resources if you get stuck.
But if you want to make it even easier, have the following information to hand:
- Full name and date of birth
- UK home address
- National Insurance number
- Email address and telephone number
- The date you started your self-employment
- A brief description of what it is you do (i.e., “web designer” or “delivery driver”)
- Proof of ID (such as a valid passport or driving licence)
Do I need to register as self-employed straight away?
Even if you’re just dipping your toe into the world of self-employment, HMRC suggests that you register as soon as possible. But technically, you don’t need to declare yourself self-employed immediately, so long as you do it by the Self Assessment deadline.
The deadline is 5 October following the tax year in which your self-employment started. The tax year runs from 6 April one year to 5 April the next.
Say you started a self-employed business in June 2021. That’s during the 2021/22 tax year (from 6 April 2021 to 5 April 2022). So you’d need to have told HMRC by 5 October 2022 that you’re self-employed.
Telling HMRC means they know you need to be taxed under Self Assessment. And this will also be the way you pay any National Insurance contributions you owe.
How much do I need to earn to register as self-employed in the UK?
There’s a low threshold for self-employed earnings. If you earn over £1,000 in a tax year, you must register as self-employed with HMRC. You then pay your tax and National Insurance contributions through Self Assessment.
But if you earn less than £1,000 (maybe through a small side hustle or hobby), you don’t need to notify HMRC.
That said, it can still be a good idea to register. It will help if you have to prove you’re self-employed to claim tax-free childcare or make voluntary Class 2 National Insurance payments.
Do I need to register as a sole trader if I’m self-employed?
It depends. All sole traders are self-employed, but not all self-employed people are sole traders.
If you work for yourself, by yourself, with no one else, you’re probably a sole trader (hence the name).
But if you’re working with a business partner (or partners), you’re technically in a partnership and must register as one with HMRC.
In a partnership, you and your partner(s) personally share responsibility for your business. That includes responsibility for any losses your business makes, and for expenses like stock or equipment.
Partners share the business’s profits, and each partner pays tax on their share via Self Assessment.
Read more: Sole Trader vs Limited Company: All the Info
Do I need to name my self-employed business?
You can trade under your own name, or you can choose to give your self-employed business its own moniker. But there are some rules you need to know when it comes to naming your business.
Sole trader names cannot:
- include “Limited,” “Ltd,” “Limited Liability Partnership,” “LLP,” “Public Limited Company,” or “PLC” in the name (as these are all distinct legal entities)
- be offensive
- contain “sensitive” words or expressions, or suggest a connection with government or local authorities (unless you get permission). Check which words you need permission to use on the gov.uk website.
You should also check that the name you’ve chosen isn’t being used by someone else. If they’ve registered it as a trade mark, they could take legal action against you.
Once you’ve picked a business name (or you’ve decided to trade under your own name), include it on your business paperwork. This will include documents such as contracts and invoices.
What are my responsibilities once I’ve registered as self-employed?
Once registered as self-employed, you’ll have several responsibilities:
- You need to keep accurate records. In particular, you must track your income and expenses, and file any correspondence you have with HMRC.
- You must complete your Self Assessment tax return online by no later than 31 January each year. If you miss the deadline, you could end up with a hefty penalty.
- You must pay any tax owed to HMRC by 31 January and 31 July each year. Along with your tax bill, you’ll also make what’s known as “payments on account”. These are advance payments towards your next year’s tax. Each payment is half your previous year’s tax bill. The first payment on account is made in January, and the second in July.
- In addition to your income tax, you must also pay Class 2 and Class 4 National Insurance contributions. We go into more depth about those here: Your Simple Guide to Self-Employed National Insurance.
- Finally, if your annual turnover exceeds the VAT threshold (£85,000 for the 2022-23 tax year), you’ll need to register for VAT. You can read more about that on the HMRC website.
What insurance do I need when I’m self-employed?
Insuring yourself as a self-employed professional is a good idea. But the type of insurance you’ll require can vary depending on the kind of work you do and whether you have employees.
Two common types of insurance taken out by self-employed workers are:
- Professional indemnity insurance to guard against potentially costly mistakes
- Public liability insurance to protect against workplace/on-site accidents
How do I inform HMRC that I’m self-employed?
The fastest and easiest way to tell HMRC that you’re self-employed is to register online. Simply follow the instructions and verify your HMRC online account as soon as your activation code arrives.
When do I need to register as self-employed?
You must register by 5 October following the tax year when you started your self-employment. You only need to declare yourself as self-employed once your earnings exceed £1,000 in a single tax year.