If you are thinking of setting up your own business, one of the first things that you must do is to formally register as self-employed.
It’s a legal requirement that you tell HM Revenue and Customs that you’re going self-employed and our guide explains exactly what you need to do.
You have to register as self employed
There are three ways that you can register as self employed with HMRC.
• By phone – you can normally register as self employed by calling HMRC’s
Newly Self-employed Helpline on 0845 915 4515
• Online – you can register as self employed online using HMRCs secure service and you will receive a letter through the post if any further information is needed
• By post – you can download and complete HMRC’s form CWF1: ‘Becoming self-employed and being registered for National Insurance contributions and/or tax’ and send this to HMRC
If you’re a partner in a Limited Liability Partnership you can only register by post.
You should tell HMRC immediately that you start working for yourself although you can’t tell them in advance of becoming self employed. If you don’t register straight away you may face a penalty.
What information you will need to provide
When registering to become self employed, you will normally have to provide information such as:
• Your name and address and date of birth
• Your National Insurance number
• All your contact details including an e-mail address and telephone number
• The date that you became self employed
• What your business is
• Your business’ name, registered address and telephone number
• Your Unique Taxpayers Reference number (if you have one)
What happens when you register
When you register as self employed HMRC will then automatically register you for Self Assessment, meaning that you will have to submit your own tax return every year.
You will also have to arrange to pay Class 2 National Insurance contributions (unless you expect your self employed income to be very low in which case there is an exception).
Most self employed people pay their Class 2 National Insurance contributions monthly by direct debit and the rate for the 2011/12 tax year is £2.50 per week.