You can set yourself up as self-employed for free on the HMRC website. Follow this guide to see the 5 steps you need to take to register with HMRC and understand your obligations once you’re officially self-employed 😃
Let’s get started 👇🏽
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
When to Register as Self-Employed in the UK
First of all, let’s clarify when you are legally required to set up as self-employed.
You’ll need to register by 5 October following the end of the tax year** (5 April) that you started working for yourself or earned more than £1,000 if you’re using the trading income allowance.
You are paid £2,000 during the tax year that ends on 5 April 2023. The deadline to let HMRC know you are working for yourself is 5 October 2023.
** the tax year runs from 6 April to 5 April each year
£1,000 Trading Income Allowance
The trading income allowance lets UK individuals earn up to £1,000 tax-free every tax year without letting HMRC know about their income – this extends to side hustlers and business owners.
It simplifies the tax system for individuals because it means they:
- Don’t need to tell HMRC about this income;
- Avoid the need to register as self-employed with HMRC and fill out a tax return;
- Can earn it tax-free and in some cases, alongside their personal allowance.
It is great for UK individuals who want to test an idea out before they set up a business or have a side hustle. You don’t have to use it though – it’s up to you.
Read this guide to find out more about the trading income allowance.
How to Register as Self-Employed in the UK
Registering is simple enough to do yourself online via a .GOV tax account. Follow these 5 steps to complete your registration:
- Visit the HMRC website
- Set up your HMRC online account
- Enrol for self-assessment online
- Get a UTR number
- Use your activation code
If you prefer, you can also apply for self-employment by phone – see below for details of how to do this.
If you already fill in a tax return for another reason, for example, because you are a landlord, receive a pension or have dividend income, then you should not apply for self-employment again. If you register again, HMRC will set you up on their system for a second time and expect two tax returns from you!
Instead, you’ll need to complete a CWF1 Form online to inform HMRC that you have a new source of income. Read this guide to learn about the CWF1 form and the link to it on the .GOV website.
Useful Information for Registration
Before you start filling in the form online, here’s some of the information you’ll need to have ready:
Step #1: Visit the HMRC Website
Head over to the HMRC website here and choose the option to register through your business tax account
Step #2: Set Up a Government Gateway Account
Set up a government gateway account – this is where you’ll manage your self-employment taxes and find important forms like your tax overview. HMRC will automatically generate a 12-digit number that you’ll use as your login.
Step #3: Enrol for Self Assessment
Complete the HMRC form to register for HMRC taxes. You’ll need to share your personal information, details about the work you will do once you are set up as self-employed and make a declaration that everything you have entered is true.
Step #4: Get your UTR number
HMRC will review your application once you submit it. Within the next 10 days they’ll send you a UTR number to be posted to you (can take up to 10 days). You may be able to find it sooner on the HMRC app or inside your online tax account.
It’s a 10-digit ID number that you’ll need to keep safe in the event you need to prove you are a sole trader, speak with HMRC and manage your self-employed taxes.
Step #5: Use Your Activation Code
Finally, you’ll also be sent an activation code for your government gateway account as part of the verification process. It can take up to 28 days for this to be sent but make sure you enter it as soon as you receive it because it will expire and you won’t be able to access important features like filing your tax return.
How to Register as Self-Employed by Phone
You can apply to register as self-employed by phone by calling HMRC on 0300 200 3500. HMRC’s opening times are as follows:
- Monday to Friday: 8am to 8pm
- Saturday: 8am to 4pm
Contacting HMRC About Your Application
If you have a question about your application or think you have made a mistake then you should call HMRC on 0300 200 3310.
What Happens Once You’re Officially Registered as Self-Employed
Once you’ve activated your HMRC account and received your UTR number you’re officially self-employed! But what does that mean?
Well, apart from being responsible for finding your own work, HMRC will require you do certain things.
Being self-employed means you’ll be part of the self-assessment system. That means completing a tax return by 31 January each year to declare your income and expenses, as well as paying tax on your business profits. Here are some guides to help you learn more about your responsibilities:
- Self-Employed Tax: An Easy Guide for Beginners
- Self-Employed Expenses – What Can You Claim?
- Keeping Tax Records and Bookkeeping When You’re Self-Employed
- Beginners Guide to Completing Your Tax Return Online
Looking for more support on your self-employment journey? Make sure you join my Facebook Group for tips, tools and challenges to help you with setting up your business and continuing your business journey.