1. Why Registering as Self Employed Matters
Registering as self employed is essential for legal compliance and financial transparency. It allows HMRC to track your income, ensures you pay the right tax, and gives you access to benefits such as pensions and maternity allowance.
2. Who Needs to Register as Self Employed
You must register if you:
- Earn money from freelance or contract work
- Run your own business as a sole trader
- Receive income outside regular employment (e.g., online sales, consultancy, or gig work)
- Make more than £1,000 per year from self-employment
3. When to Register
You must register by 5 October in your business’s second tax year. Failing to do so may result in penalties from HMRC.
4. How to Register Online
The easiest way to register self employed business is through the HMRC website:
- Create a Government Gateway account
- Provide your personal details (name, address, National Insurance number)
- Submit details about your business activity
- Receive your Unique Taxpayer Reference (UTR) number by post
- Set up your online Self Assessment account
5. Information You’ll Need to Provide
- Full name and address
- National Insurance number
- Business start date
- Nature of your business activity
- Contact details for correspondence
6. Self Assessment Tax Return
As a self employed person, you must file a Self Assessment tax return every year. This includes reporting:
- Income earned
- Allowable expenses
- National Insurance contributions
- Any other taxable income
7. National Insurance Contributions (NICs)
When you register self employed business, you’ll need to pay:
- Class 2 NICs if your profits are above the small profits threshold
- Class 4 NICs if your profits are higher, based on a percentage of earnings
8. Business Bank Account
Although not legally required for sole traders, a separate business bank account helps keep finances clear and simplifies tax reporting.
9. Record Keeping Requirements
Self employed workers must keep accurate records, including:
- Income and expenses
- Invoices and receipts
- Bank statements
- Mileage logs (if applicable)
Records should be stored for at least six years.
10. Allowable Expenses for Self Employed Businesses
You can reduce your tax bill by claiming expenses such as:
- Office supplies and equipment
- Travel costs (fuel, parking, public transport)
- Marketing and advertising
- Insurance and professional fees
- Home office expenses (if working from home)
11. VAT Registration (Optional)
If your turnover exceeds the VAT threshold, you must register for VAT. Some businesses also register voluntarily to reclaim VAT on expenses.
12. Business Insurance
To protect your work, consider insurance such as:
- Public liability insurance
- Professional indemnity insurance
- Income protection insurance
13. Growing Beyond Sole Trader Status
As your business grows, you may choose to:
- Register as a limited company for tax efficiency
- Hire employees and register as an employer
- Seek investment or expand services
Frequently Asked Questions
Q1: How much does it cost to register self employed business?
It’s free to register as self employed in the UK.
Q2: Do I need an accountant as a self employed person?
Not required, but an accountant can save time and help optimize taxes.
Q3: Can I be employed and self employed at the same time?
Yes, you can work a job and run a side business. You must declare both incomes.
Q4: What happens if I don’t register self employed?
You may face penalties, interest on unpaid tax, and investigation by HMRC.
Q5: Can I register self employed business before earning money?
Yes, you can register once you plan to start trading.
Q6: Do I need a business name to register?
You can trade under your own name or choose a business name, but it must not be misleading.
Conclusion
Registering self employed business is straightforward but essential for legal compliance in the UK. By registering on time, maintaining accurate records, and understanding your tax obligations, you can confidently run your business while avoiding penalties.