Do you have to register with HMRC if you are self-employed? | How to register as self-employed

Self-employed taxpayers should notify HMRC as soon as practicable when they begin working for themselves. To register as self-employed, HMRC must be officially notified by 5 October following the end of the tax year so that a self-assessment return can be issued on time and to avoid any unnecessary penalties.

What makes you qualified as self-employed

HMRC’s guidance says that you are probably self-employed if you:

• run your business for yourself and take responsibility for its success or failure;
• have several customers at the same time;
• can decide how, where and when you do your work;
• can hire other people at your own expense to help you or to do the work for you;
• provide the main items of equipment to do your work;
• are responsible for finishing any unsatisfactory work in your own time;
• charge an agreed fixed price for your work; or
• sell goods or services to make a profit (including through websites or apps).

An individual can be both employed and self-employed if they work for someone else as an employee, then run their own business outside of those hours.

How to set up as a sole trader

You will need to set up as a sole trader if:

• If you’re earning more than £1,000 from self-employment; or
• you need to prove you are self-employed, for example to claim tax-free child care; or
• you want to make class 2 NIC payments to help qualify for benefits.

Self-employed people classed as sole traders must register for self-assessment tax returns. If you have already registered for a self-assessment tax return for another reason, such as income from a property you must register again as a sole trader, which will then register you for class 2 national insurance contributions.
Self-employment tax exemption

There is an exemption for sole traders from registering for tax where they have trading income of up to £1,000 from:

• self-employment;
• casual services, for example, babysitting or gardening; and
• hiring personal equipment, for example, power tools.

Where this £1,000 allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared to HMRC.

Contact us

If you are unsure if you are self-employed and want advice on how to register correctly, contact our specialist tax team. Our Tax team can help you register and complete your self-assessment tax return.