How to Register as Self-Employed?

PHS Team

24 Feb, 2025

Registering as self-employed is an important step towards starting your own business, freelancing, or becoming a contractor, and escaping the regular job routine. It's important for legal and tax reasons. It makes your work official, ensures you pay taxes correctly, and gives you access to benefits, helping you build a strong business.

This blog will guide you through the registration process. We'll cover whether you need to register, how to fill out the forms, important deadlines, what happens after registering, and common mistakes to avoid. 

What is meant by Self Employed?

Self-employment means working for oneself and taking ownership of the success or failure of your company. Self-employed individuals do not work for another company. 

It offers independence, allowing you to make your own decisions and set your work schedule. 

However, it also comes with the responsibility of managing all aspects of your business, from finances to marketing. Unlike employees, self-employed individuals aren't paid through PAYE and don't have the same employment rights.

Self-employed people are responsible for handling their own taxes, National Insurance contributions, and business expenses, in contrast to regular employees. This needs for careful documentation of earnings and outlays as well as the yearly submission of a Self Assessment tax return to guarantee to tax laws.

When should you register as self employed?

You should register as self-employed with HMRC as soon as you start your business activities. Here’s when you need to register:

1. You must register as soon as you begin business activities. This includes tasks like marketing, setting up a website, or looking for clients. 
2. You must register if you begin earning money as a self-employed person. 
3. In the second tax year of your company, you have to register by October 5th. There may be fines for late registration.
4. You must still register if you work as an employee but also make money on your own. 
5. While your self-employment income needs to be recorded separately, your wages are taxed under PAYE.
6. You have to register for CIS if you work in the construction industry. Subcontractors such as carpenters, painters, and builders are covered by this.

By registering at the right time, you stay compliant with HMRC and avoid unnecessary penalties.

Step-by-Step Guide to Registering with HMRC

Follow this step-by-step guide to complete the process smoothly.

Check If You Need to Register

You must register as self-employed if:

• You earn more than £1,000 from self-employment in a tax year.
• You work for yourself and are responsible for your business’s success or failure.

Gather the Required Information

Before registering, ensure you have:

• National Insurance (NI) number
• Personal details (name, address, contact details)
• Business details (trading name, business type, start date)

Register with HMRC

There are two methods to register with HMRC:

Register Online

1. Visit the HMRC online registration portal.
2. Create a Government Gateway account (if you don’t have one).
3. Complete the Self Assessment registration form.
4. Submit your details and receive confirmation from HMRC.

Register by Post

1. Download and print the CWF1 form from the HMRC website.
2. Fill in your personal and business details.
3. Send the completed form to HMRC’s address (provided on the form).
4. Wait for confirmation, which may take longer than online registration.

Receive Unique Taxpayer Reference (UTR) Number

After registration, HMRC will send you a Unique Taxpayer Reference (UTR) by post within 10 working days. This number is essential for filing your Self Assessment tax return.

Set Up a Business Tax Account

• Log in to your Government Gateway account.
• Access your business tax account to manage payments, tax returns, and HMRC communications.

Keep Records of Income and Expenses

HMRC requires you to keep accurate financial records, including:

• Invoices and receipts
• Bank statements
• Business expenses

Submit Your Self Assessment Tax Return

• Self-employed individuals must submit a Self Assessment tax return annually.
• The deadline for online submission is 31st January following the tax year.
• Pay any income tax and National Insurance due by this deadline.

Update to HMRC

• Keep your business records updated.
• Inform HMRC if you stop trading or switch to a limited company.
• Stay aware of tax changes to remain compliant.

What Happens After You Register as Self-Employed?

Once you’ve registered as self-employed with HMRC, several important steps follow. Here’s what to expect:

1. Receive a Unique Taxpayer Reference (UTR) Number: HMRC will send your UTR number by post within 10 working days (21 days if you're abroad). 

2. Set Up Your HMRC Online Account: You’ll receive a Government Gateway ID and password. Use this to access your business tax account, where you can file returns, check tax payments, and manage HMRC correspondence.

3. Start Keeping Financial Records: You must keep detailed records of your income and expenses. This includes invoices, receipts, and bank statements (if applicable).

4. Understand Your Tax Obligations: As a sole trader, you must pay, Income Tax on your profits, National Insurance (NI) Contributions (Class 2 & Class 4). 

5. Submit Your Self Assessment Tax Return: You need to complete a Self Assessment tax return every year. Missing deadlines can result in penalties.

By following these steps, you can manage your tax responsibilities effectively and stay compliant with HMRC regulations.

Common Mistakes to Avoid When Registering as Self-Employed

Here are some common mistakes to avoid when registering as self-employed:

1. You must register by 5th October in your second tax year. Missing this deadline may result in penalties.
2. Providing incorrect National Insurance numbers, addresses, or business details can delay the registration process.
3. Some people mistakenly register as sole traders when they should be setting up a limited company or partnership.
4. Failing to track income and expenses can lead to tax miscalculations and compliance issues.
5. If you stop trading or switch to a limited company, you must inform HMRC.
6. Self-employed individuals must submit a Self Assessment tax return annually. 

Avoiding these mistakes will help ensure a smooth registration process and prevent unnecessary fines or tax issues.

Important Deadlines to Remember

Here are key deadlines to remember when you're self-employed in the UK:

• You must register for Self Assessment by 5th October following the end of the tax year in which you became self-employed. 
• If you choose to submit a paper tax return, it must be filed by 31st October.
• To have HMRC collect your tax through your PAYE tax code, you must submit your online tax return by 30th December.
• The final deadline to file your online tax return and pay any tax owed for the previous tax year is 31st January. 

By keeping track of these deadlines, you can ensure compliance and avoid unnecessary fines.

FAQ’s about registering as self employed

Can I be employed and self-employed at the same time?

Yes, you can work as both an employee (PAYE) and a self-employed individual. However, you must report your self-employment income separately to HMRC.

What happens if I don’t register on time?

Late registration can result in penalties, including a £100 fine, with additional charges for further delays.

What if I change my business type later?

If you switch from self-employed to a limited company, you must inform HMRC and register the company separately with Companies House.

If you're looking for professional help to register as self-employed, PHS Associates is here to support you every step of the way. Looking for expert guidance ensures that the registration is completed correctly, saving you from potential mistakes and penalties. Our team of experienced accountants can handle the entire registration process on your behalf, providing you with peace of mind. 

If you're ready to register as self-employed, let PHS Associates handle the paperwork so you can focus on growing your business. Contact us at 0208 8611685 and email at info@phs-uk.co.uk.