When To Register as Self-Employed

Understanding when you need to register as self-employed is important because it’s part of you keeping things legal and avoiding penalties. Here are the registration deadlines you need to be aware of.

[This is part of the Understanding Self Employment Series]

When Should You Register as Self-Employed?

The deadline for registering as self-employed is the 5th October following the end of the tax year you started working for yourself. The tax year starts on 6 April each year to 5th April. So if you started working for yourself on 1 December 2020 you’ll need to register with HMRC by the 5th October 2021.

Even if you have plenty of time to register, it is advisable to do it as soon as possible because there are penalties if you miss the deadline.

Do You Need to Register Your Business?

If you have an active business, whether loss making or not, you need to let HMRC know once your income (not profit) goes over £1,000. Below £1,000 you can choose to take advantage of the HMRC trading allowance, but this isn’t always tax efficient so you should check if it is right for you first. In particular, you won’t be able to claim tax losses which can reduce your tax bills in the future, if you plan to work for yourself on an ongoing basis.

Can You Run a Business Without Registering It?

Every business or sole trader needs to be registered for tax, whether they are making a profit or not. That’s because HMRC wants to track what is happening in the world through self assessment. You can start to run a business without registering it until turnover (not profit) exceeds £1,000, after that, you’ll need to register as self-employed.

If you are planning to set up a business and operate through a Limited Company, you’ll need to register your business at Companies House before you can use the name and the letters LTD or Limited at the end of the name.

Keep on Reading: Sole Trader or Limited Company? Which Business Structure is Right for You? plus access to a free tax calculator to help you work out which business structure will help you to pay less tax.

Do I Need to Register My Business Straight Away?

Although you have until 5th October following the end of the tax year you started working for yourself to register (see above), HMRC does advise that people register straight away. However, you can also take advantage of the £1,000 trading allowance and wait until your income (not) profit goes over £1,000.

If you are planning to form a Limited Company then you’ll need to form the company before you start trading so you can use the suffix LTD or Limited, as well as enjoying all the benefits that limited liability brings.

Key Takeaways

  • The deadline for registering as self-employed is the 5th October following the end of the tax year you started working for yourself;
  • You can earn an income (not profit) of up to £1,000 without letting HMRC know about it;
  • The rules are different if you operate through a LTD company meaning you’ll need to form your LTD before you start trading so you can use your full Company name.

[This is part of the Understanding Self Employment Series]

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.