If you’re an entrepreneur just starting out in your new business venture, you’re going to need to make sure that you register with HMRC for a tax self assessment.
This guide is aimed at entrepreneurs who are registering for the first time; if you’ve sent tax returns before, you’ll need to read the information on this government page to find out on how to get setup again.
Who needs to register for self assessment?
Self assessment is a requirement for:
- Self-employed sole traders
- Limited company directors
- Partners in general partnerships and LLPs
In the government’s words, “you’re a sole trader if you work for yourself and haven’t chosen another business structure”.
The UK government uses your self assessed tax return to collect Income Tax, which is normally automatically deducted from wages, savings and pensions. If you have other sources of income, they should also be reported in the tax return.
Registering your business
The first step of registering for Self Assessment as a self-employed sole trader is registering your new business with HMRC.
The government ask that you register as soon as possible after starting your business, but at the latest you should be registered by the 5th October following your first tax year. So if you started between April 2015 and March 2016, you need to be registered by the 5th of this coming October.
To register your new business, you’ll need to head to this page.
Once you start the registration process, you’ll be taken through the steps to create a Government Gateway account. Doing this will generate a User ID which you’ll only see once, so make a note of it.
Once you have a Gateway account, you’ll then be asked to fill in some more details about your business, which will enable you to finish setting up your account, and enrol you for the Self Assessment service.
Unique Taxpayer Reference (UTR)
After completing this first stage of your registration, the HMRC will send you an acknowledgment letter to your business address which will include your Unique Taxpayer Reference (UTR).
You’ll need this number to file tax returns and to pay tax in the future, so be sure to keep it safe.
(A note for other circumstances)
If you are registering for Self Assessment for the first time and you are not a self-employed sole trader, the process will be slightly different. For partners in general partnerships and LLPs, you’ll need to register here with the partnership’s UTR.
Anyone who needs register who is not self-employed (which includes limited company directors) will need to submit an SA1 form before starting the process, after which they will be sent a UTR that they can use to complete their enrolment online.
Activating your account
Once you have received your UTR (and enrolled online with it, in the case of employees), you will be sent an activation code in the post which you will use to complete the registration process.
UK residents should receive their code within 10 working days (though this may be longer for people living abroad), and you then need to enter this code online to fully activate your account.
The code will be valid for 28 days after you receive it, so make sure you use it within that time frame.
What to do after registration
Once you have activated your account, you’re all set to start filling in your Self Assessments.
As mentioned earlier, they can be filed online or on paper and sent in the post, and you need to be aware of the different deadlines. Once you have registered, you won’t need to register again in the future unless for whatever reason you don’t fill out a Self Assessment form one year.
Deadlines for self assessment registration
There are several deadlines for registration and payment that you need to be aware of. The end of the 2016/17 tax year is 5th April 2017, and you must be registered online by 5th October.
Remember, when you register, you are registering for previous tax year, not the current one. You are required to register online even if you plan on posting your tax return, rather than filling in the online form. Registration is not immediate - it can take up to four weeks for people living in the UK, and longer if you live abroad - so you need to make sure you leave time for the process to be completed before the deadline.
Once you have registered, there are deadlines for the filing of your tax return and the payment of all tax that is due. If you file your return in paper, your deadline is 31st October, however, if you file your return online, you have until 31st January 2018 (for tax year 2016/17). Regardless of the format of your return, everything must be paid in full by 31st January.
published under Tax and Legislation Guides
