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First steps to register as self-employed

How and when to register with HM Revenue & Customs (HMRC)

It's important to let HMRC know that you're self-employed as soon as possible - even if you already fill in a Self Assessment tax return each year. If you don't tell them, you may have to pay a penalty.

You can let HMRC know about your self-employment by registering online for business taxes. You'll be asked for information about yourself and your business. HMRC will set up tax records for you using the information you provide, for example records for:

  • Self Assessment
  • National Insurance
  • PAYE if you have people working for you

A Self Assessment Online account automatically will be set up for you at the same time, unless you say that you don't want one.

Register for HMRC business taxes

Partners and partnerships

The nominated partner can register the partnership online for business taxes. A Self Assessment Online account will automatically be set up for the partnership.

Register for HMRC business taxes - partnership

Partners in business partnerships will separately need to register themselves for Self Assessment first and sign up for Self Assessment Online (if they wish to do so). Follow the link below for more information.

Registering for Self Assessment - partners

Arranging to pay your Class 2 National Insurance contributions

As well as registering for HMRC taxes, you’ll need to arrange to pay Class 2 National Insurance contributions straight away. You'll need to pay £2.65 per week for the 2012-13 tax year.

However if you expect your earnings to be below £5,595 for the 2012-13 tax year, you may not have to pay Class 2 contributions. See the section 'What to do if your earnings will be low' if you think that this applies to you).

The most convenient way to pay Class 2 National Insurance contributions is by Direct Debit.

Paying by Direct Debit has many advantages:

  • It is easy to set up - just fill in the application form and send it to HMRC. You will need a suitable account at a bank or building society.
  • It runs automatically - once set up, your Direct Debit will run automatically.
  • It helps your budgeting - for people in business good cash flow and budgeting are essential. Direct Debit means that you have to plan for only one month’s payment in arrears.
  • It gives you peace of mind - payments are made on time, every time - there is no risk of losing benefit because you forgot to pay.

Go to form CA5601 Application to pay Class 2 contributions by Direct Debit

If you are unable to pay by Direct Debit, HMRC will send out a payment request every six months in October and April.

What to do if your earnings will be low

If you expect your income from the business to be low for the tax year you may not have to pay Class 2 National Insurance contributions. You have to apply to be excepted first. Follow the link below to find out more.

Go to form CF10 Self-employed people with small earnings

Budgeting for your tax and Class 4 National Insurance contributions

When you start self-employment it may be a while before you get your first tax and Class 4 National Insurance bill. So it’s a good idea to set aside some money from the start. You can use our interactive ready reckoner to help you budget for this, if your tax affairs are straightforward. It will give you a rough idea of how much tax and Class 4 National Insurance a single self-employed person, with no other taxable income, would need to set aside. Follow the link below to the self-employed ready reckoner.

Introduction to self-employed ready reckoner

More useful links

Employing someone else

If you are thinking of taking someone on, or already employ someone else, please see our introductory guidance on PAYE for employers.

Introduction to PAYE for employers

National Insurance

Introduction to National Insurance

VAT

You don't have to register for VAT until your taxable turnover reaches a certain limit, but there's plenty of advice available when it does. Follow the links below to find out more.

Getting started with VAT

Giving your business the best start with tax (PDF 352K)

Employed or self-employed?

If you are going to be working for one person or firm, you may be an employee rather than self-employed. For more information you can:

  • use HMRC’s online Employment Status Indicator by following the link below or
  • contact your nearest Tax Office

Use the Employment Status Indicator

Find your Tax Office

Contractors and sub-contractors in the construction industry

If you are a contractor and or sub-contractor in the construction industry you must also register with the Construction Industry Scheme (CIS). Follow the link to find out more.

Getting started with CIS - contractors, subcontractors and tax agents