Register for pitys sake!

I feel like a broken record when it comes to this subject, but a lot of people are either unaware or chose to ignore the fact that once you are self-employed /freelance in the UK, you must register with HM Revenue and Customs.

Why?

Well besides the multitude of fines and interest you would accumulate, you are also breaking the law.

It is really simple. When you work as employed (for a shop, company, call centre etc) you have National Insurance (NI) and Tax taken out of your wages before you receive it in hand.

Tax is to pay for the country, NI is to pay for you. So that when you sign on as unemployed, or you are off sick and need benefits, you have already paid your share.

So working for yourself is no different, you need to chip in, to get something out. Also it would be rather unfair to not pay, else everyone would be self-employed!!

When the Revenue asks you to register within 3 months, this means the first day you start advertising, or open your shop, or take on a contract. It basically means the first day you can work. Not the first time you get paid or when you feel like it. Hence the 3 months lee-way.

All you have to do is phone their helpline which takes 5-10 mins max, or download the form CWF1 from their website and you’re sorted.

National Insurance is paid quarterly or monthly by bill or direct debit.

If you expect your first year of income to be less than the required threshold – £4,635 in 2007-08 and £4,825 in 2008-09, you can apply to be ‘exempt’ – because you have not earned enough.

Then they give you a nice little letter called a “Certificate of Small Earnings Exception” to confirm you do not have to pay any NI. Bearing in mind you are not paying for your benefits (unless you already pay in an employed job).

Tax is paid nearly 18 month after you register. What happens is, once you register, the National Insurance department send your details to the Tax Office, whom within a few weeks, will confirm they have received your details. When the next April comes, you should receive a Self Assessment Tax Return to complete.

This is a rather lengthy form, and quite daunting to some, so get help! Ring the helpline, pop into your local office or ask a friendly accountant and they will gladly go through the form with you. Alternatively you can complete it online.
If you send your details (income, expenses, profit) into the Revenue by September of that same year, they will work it all out for you. If you are confident you can do it yourself, you must have it in by the 31st January the year after.

In summary, you register within 3 months. You pay NI every quarter or month unless you are exempt. You pay tax 18 month after you start. Good Luck!

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