I've gone self employed. What do I do now?
Now that you're self employed, it can seem like a daunting task to adhere to HMRC’s deadlines and requirements. It doesn’t have to be this way: by doing your research in advance and knowing what you are required to do will set you off on good standing. Here are some key areas that must be address when you are self employed.
First task you need to do is register with HMRC as self employed. This can be done in 10 minutes via their website or over the phone. Within 10 days you will receive correspondence confirming you are now set up as self employed. You will also receive your unique tax reference number (UTR), this will stay with you for life and is unique to yourself.
You will need to keep all paperwork relating to the income and expenses of the business along with bank statements. HMRC allow you to either keep paper records or digital records.
In general, expenses wholly or partly used for business purposes can be claimed either 100% or at an appropriate % to reflect the business use. In a later blog we will drill down into claimable expenses. The main thing to remember is that if you intend to claim expenses, you must keep a copy of the receipt.
Annual Tax Return
Unlike when you are employed, you are not taxed on a regular basis. HMRC do not know how much income you have received therefore you will need to complete an annual Tax Return. A Tax Return covers the period 6th April to the following 5th April. A Tax Return doesn’t just include you self employed income, but all forms of income. HMRC need all this information to work out how much tax you should have paid for that year. The Tax Return has a deadline of 31st January following the end of the tax year. For example for the tax year ending 5th April 2017, the filing deadline is 31st January 2018. Any balancing tax payment will also be due on this date.
Talk to us.
We have addressed some areas that need to be considered now that you are self employed. In future blogs we will explore other aspects of being self employed. Here at Howards Accountants, we can provide the complete end to end service. From setting you up with HMRC, guiding you though your first year to filing your Tax Return all from £25pm. We offer fixed fees with unlimited support at no extra cost and no surprise fees, perfect for budgeting and the clients that need that extra support. Get in touch to see how we can help you.