What is Self Employment?
If you run your own business, but not under a limited company, you have to register as a self employed individual with HMRC.
When you are self employed, you are personally responsible for the liabilities incurred by your business.
You might have to register for self assessment even if you are not self employed, if you receive:
money from renting out a property
tips and commission
income from savings, investments and dividends
What are my responsibilities?
Within 3 months of starting the activity or meeting the criteria for registration as above, you have to let HMRC know via telephone or online.
Once registered, HMRC will issue a unique tax reference number (UTR) which confirms your self employment status. If you trade within the Construction Industry Scheme, you should then register as a subcontractor and be paid with 20% tax deduction.
Once a year, you will have to declare your income and expenditure in a Self Assessment Tax Return and pay any tax and NI contributions due.
Self Assessment Tax Return
The yearly declaration of income you have to submit to HMRC is called Self Assessment Tax Return. HMRC will collect your tax based on what you declare.
It is therefore crucial that you keep all the records reflecting your income and expenditure for at least 5 years.
The financial year runs from 6th April to 5th April next year. It is for this period that you need to declare your income and expenditure. Even if you had no income, but your UTR record was active, you still need to file the self assessment.
The deadline to submit the tax return and pay the tax is 31st Jan the following year. Failure to do so results in penalties and interest.
If you no longer meet the criteria to file a Tax Return, you need to notify HMRC online.
What can Priority Point do for you?
We can process your self employment registration with HMRC
We prepare, produce and file your self assessment tax return
We advise you what expenses are allowable to ensure accuracy and compliance with HMRC
We liaise with HMRC on your behalf if there is a repayment of tax to you
We guide you through payment methods and keep you updated with deadlines
We can notify HMRC when you stopped trading as a self employed individual