I’m now self-employed, what are my filing obligations?

Your first action will be to register with HMRC if you do not already file a tax return. The deadline for this is 5th October in the second year of trade. If you are not registered by this deadline, you may be fined. Ideally, you should register as soon as possible. 

If you are taking on employees, you will need to register for a PAYE scheme before their first payday. You can register up to two months before you first pay them. 

Your first period for tax will run from when you began trading until the next 5th April, the income tax year end. You will then have until 31st January in the following year to file your tax return. If you miss this deadline, you will be given a £100 penalty. This can increase if you are more than three months late. 

In years 2 or 3, depending on your chosen year end, you will be taxed each year on the 12 months up to your year end in each tax year. For example, if your year end was 30th June 2020, your results would be included in your 2020/21 tax return, which does not need to be filed until 31st January 2022. 

If your business makes more than £85,000 over 12 months, you will need to register for VAT. You also need to register if you expect your business will make more than £85,000 in a single 30 day period. Not all forms of income count towards the £85,000 threshold and in some cases it may be advantageous to register early, so please contact us on 0203 621 5511 about VAT registration if you need to discuss this further.  

 

Date published 7 Jul 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.