Self-employment (sole trader; working for yourself) is the simplest form of running a sole proprietorship in the UK, which must be registered with HM Revenue & Customs. To register you need a National Insurance Number (NIN) and an address in the UK. You can be both employed and self-employed at the same time.
Sole trader is obliged to issue invoices for goods/services sold, keep records of business’s expenses and send a Self-Assessment tax return every year. The tax year in the UK starts from April 6 to April 5 and the deadline for paper tax return forms is October 31. From November 1 to January 31, you can only submit the return online. If you had zero income from self-employment, you still have to submit a tax declaration.
Sole trader is obliged to pay two types of National Insurance Contributions:
- National Insurance Class 2 (if your profits are £6,365 or more a year)
- National Insurance Class 4 (if your profits are £8,632 or more a year)
- You also have to pay Income Tax for the income above the Personal Allowance (£12,500 in 2019-20)
- 20% income over £12,500 to £50,000
- 40% income from £50,000 to £150,000
- 45% income over £150,000
Personal allowance drops by £1 for every £2 earned over £100,000.
The deadline to pay the tax you owe is midnight January 31.
You must register your business for VAT if you expect your VAT taxable turnover to be more than £85,000 in the next 30-day period or if your business had a VAT taxable turnover of more than £85,000 over the last 12 months. Otherwise, you can register voluntarily if your turnover is less than £85,000, unless everything you sell is exempt.
In Sara-Int Ltd we will fill in all the documents needed to register self-employment for you and we will take care of the annual tax returns. If you decide to cease, we close all formal matters regarding accounting and taxes.
As registered agents, we are authorised to provide direct contact with HMRC on your behalf. We cooperate with clients in our office, by phone, post and by e-mail.