How to register as self-employed in the UK?

According to statistics, the number of self-employed individuals in the UK has risen to about 4.19 million as of January 2022. This is despite the fact that the advent of COVID-19 saw a fall in self-employment. To this effect, the UK government rolled out measures to help small-scale businesses which came in the form of the Self-Employment Income-Support Scheme.

To be able to have access to these kinds of government schemes, however, the government needs to recognise you as self-employed.

Who needs to register as self-employed in the UK?

Even though you may decide not to register with the government through the HM Revenue and Customs, you must compulsorily register if you have earned at least £1000 between 6 April 2020 and 5 April 2021 from your business (i.e., within a year of starting a business) or otherwise face penalties. Also, if you check off any of the following

1. You need proof of employment to be able to claim some benefits like Tax-Free Childcare.
    
2. To qualify for benefits accrued to persons who subscribe to a voluntary Class 2 National Insurance scheme.
    

How to register as self-employed?

Here is some information you will need to register with HMRC:

• Name of business. You need to choose a unique name that is not already in use by someone else and that is not offensive.
• Start date (the date you started your business)
• Type of business (what your business is all about). For this, you may need a SIC code which is readily available on the HMRC website.
• National Insurance number – This insurance number enables you to work in the UK so if you do not already have it, you can apply for and obtain one before commencing your registration with HMRC. You can do the application online and it will normally take 16 weeks (4 months before you get your NI number).
• Other personal information such as Legal name, Date of birth, Phone number, Email Address, Postal Address

To register, you can either:

• Fill out the online form (self-assessment form – SA103S or SA103F forms) through the HMRC website,
• Print the form, complete it and mail it to the address on the form, or.
• Call HMRC on 0300 200 3310.

When to register as self-employed?

HMRC has a legal requirement that you register your business no later than October 5 of the taxation year in which you started your business. For example, let’s say you started your business in February 2021. As the tax year in the United Kingdom is April 5, 2021 to April 6, 2022, you must register your business on or before October 5, 2022.

It is very important you register as soon as possible to avoid being penalised by the HMRC.

What are your responsibilities after registering as self-employed?

1. Keep a separate business account to make tax filing easier. This is because you will need to be able to track your expenses and returns for proper tax documentation which may be difficult if you lump it all together in a personal bank account. 
    
2. If your taxable turnover is more than £85,000 annually, you must compulsorily register for VAT or risk being penalised by HMRC. Also, if you take over a VAT-registered business, buy or sell VAT-exempt goods, provide goods and services in Northern Ireland, or supply goods and services to the UK even if you are not based there, then you need to register for VAT. You can still choose to voluntarily register even if your turnover is below the threshold because VAT gives your company a kind of credibility that makes people think your turnover is high. Your VAT can also be claimed on the goods and services you sell. Registering for VAT can thus be beneficial for your business.
    
3. Retain all records such as receipts, invoices, HMRC matches, etc. for at least 5 years.
    
4. Always file your Self-Assessment tax return on or before the 31^st of January of every year.
    

Conclusion

While you may choose not to register with the government as self-employed, it is beneficial and can give a sense of legitimacy to your business, especially with some customers or clients.