Learn the steps to register for tax return if you are a Sole Trader

Once you’ve decided to become self-employed also called a sole trader, you will need to register with HM Revenue and Customs (HMRC). If you are a director of a limited company or Landlord or an Employee with having high net worth income or an Expat, please refer to our other guide “Register for Self-Assessment even if you are not self-employed”.

To apply for self-employment status, you must have your NI number or apply for a National Insurance number. Following that, you’ll need to create an account on the Government Gateway portal of HMRC, obtain a UTR (Unique Taxpayer Reference) and. Once registered, you’ll have several legal obligations, including keeping records, filing tax returns, and paying income taxes.

Benefits of being self-employed

Being self-employed offers a variety of advantages. This flexibility gives you the power to choose your own work schedule, environment, and success. Many budding entrepreneurs find that being self-employed allows them to be their own boss and control their own destiny. Not only does it free you from the constraints of an office environment, but it also eliminates the annoyance of office politics. In addition, you are able to make decisions on who you hire and when.

Another benefit of being self-employed is that you can set your own hours. You can also decide which days and times work best for you. If you feel like you need a break or want to take on more training, you can take the time to gain more qualifications and develop your business to make it more marketable. However, it is important to note that you will have to take on responsibility for your own financial planning, as you will not receive any pension payments from your employer.

Tax implications of being self-employed

As a self-employed person, your business profits are taxed and financed through the National Insurance scheme. Profits are calculated as the sum of your business profits minus your allowable expenses. Your personal allowance is also included in your profit. Although you will be required to pay income tax on all taxable income, the first £ 12,570 is tax-free. Self-employed individuals should claim their personal allowance only once.

If you are a sole trader and your income is less than £ 150,000, you may find it more straightforward to set up your accounting and pay tax on your income on a cash basis. For example, if you work from home, you can claim reasonable deductions for expenses you incur in running your home office. These expenses include rent, mortgage interest, utilities, council tax, telephone bills, and broadband usage.

HMRC requirements for self-employed people

If you’re a self-employed person, you have certain obligations to comply with, including the HMRC requirements for self-employed people. To avoid being penalized, self-employed individuals are required to register with the HMRC by the end of their tax year, which runs from 6 April to 5 April. Self-employed individuals must also submit their income to HMRC in order to receive the Personal Allowance, which is a government tax benefit that applies to the highest-paying job.

First, you must determine if you are self-employed or employed. The distinction between self-employment and employment can be confusing and some businesses may take advantage of people who are looking for work to avoid paying PAYE and tax. The HMRC can demand that you pay PAYE by approaching your business first. If you’re self-employed, be sure to read the HMRC Employment Status Manual and follow the guidance in it carefully.

Application process

Whether you want to work for yourself or run a sole trading small business, you will need to register as self-employed in the UK. There are several steps to take to ensure that you are properly registered as a self-employed person. You must also pay attention to the rules and regulations regarding self-employment. You should be aware of these rules and regulations so that you can operate legally and compliantly. Listed below are some of these steps.

Firstly, you must register for a self-assessment with HMRC. The process is simple. HMRC will ask for some information, such as a UTR number and details of your business. Once you’ve registered, you’ll receive a Unique Taxpayer Reference (UTR) number that you can use to file your tax returns. Make sure to keep your records as accurate as possible and complete your annual tax return.

Time needed: 30 minutes

Steps to Register if you are self-employed
You must register for both Self-Assessment and National Insurance-Class 2 in case you need to send a tax return or you did not send one last fiscal year.
The way you register will depend on whether or not you have previously sent a tax return. The deadline to register is before 5 October in the second tax year of starting a business. If you don’t, you could face a fine

  1. If you have never filed a tax return,

    A. Register for Self-Assessment or Class 2 National Insurance using your Business tax account. To sign in, you will need a Government Gateway username and password. You can create a user ID to access your business tax account if you don’t have one.
    B. Within 10 days, you will receive a letter containing your Unique Taxpayer Referral (UTR) number (21 if abroad). To file a return, you will need your UTR.
    C. A reminder email or letter will be sent to remind you to submit a Self-Assessment tax return by the due date.
    You can file your taxes any time before the deadline

  2. If you have previously filed your tax return online

    Register online (formCWF1) to self-assess and class 2 National Insurance if you had filed a tax return in past but didn’t do in the previous year.
    You’ll need your 10-digit UTR (Unique Taxpayer Reference).You can use the following code to get rid of your old registration. You can Find your UTR If you don’t know it.
    A reminder email or letter will be sent to remind you to submit a Self Assessment tax return by the due date.

  3. If you have filed tax returns before, but not online

    Signup to your tax account, and then add Self Assessment. To sign in, you will need your Government Gateway username ID and password.
    You can open a business tax account, if you don’t already have one. You can set up an account for a sole trading business organisation and not an individual.
    You’ll need your 10-digit UTR number (Unique Taxpayer Reference), usually written on a copy of past submitted return. To file a Return, you must wait until your online account is activated. If you don’t remember UTR, then you can Find your UTR 
    A reminder email or letter will be sent to remind you to submit a Self Assessment tax return by the due date.

How Gatwick Accountant can help to register as self-employed?

In case you like expert assistance, you can always reach out to our Accountants for Self-Employed by contacting on this page. We provide a free registration service if you opt for our accountancy and tax services for your business.

What is the accountant’s fee for preparing accounts and filing a tax return?

Our tax return service fee for self-employed starts from £20 per month for an annual contract. You can refer to our pricing page for more information.

In case you like expert assistance, you can always reach out to our Accountants for Self-Employed by contacting on this page.

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