Tax is all about hitting deadlines. Do as the HMRC asks in good time, and you’ll avoid any penalties or punishment. And the first deadline you need to hit is for registration.
The HMRC registration deadline is looming, so make sure you read on to see if you need to register, how to register, what’ll happen if you don’t, and when that deadline is.
That’s because as far as tips go when you’re employed, your boss is usually responsible for working out the tax impact and making sure the right tax is applied.
When you’re self-employed though, things get a little more complicated.
So, if you’re a driver, a hairdresser or any other kind of self-employed person who’ll occasionally see a financial thank-you from your customers, here’s what you need to know – and what you’ll need to do.
How do you register with HMRC?
First, check if you need to register. You need to register with HMRC if:
- You worked for yourself as a sole trader, business partner or director of a limited company – even if you had another job
- You earned more than £1,000 – before taking off any expenses
Remember, working for yourself includes selling more than £1,000 worth of items on eBay, Etsy or Vinted. Second, head over to their website and register online.
If you deliberately didn’t register, and deliberately didn’t tell them, you’re in more trouble.
HMRC then looks at whether or not you came clean. If you get in touch and say “oops, sorry I missed it,” they’ll treat you more kindly than if they come looking for you. The table on the HMRC website isn’t the clearest, but view it as a sliding scale.
If it’s a non deliberate mistake and you tell them within 12 months, you pay between 0% and 30% of the amount they think they missed out on.
If it’s deliberate, concealed, and you don’t come clean, it’s 100%.
Missing the deadline isn’t the end of the world. But you need to own up to your mistake.
That doesn’t leave you with much time. You need to make sure that if you’re self-employed, contracting, or otherwise need to submit a self assessment tax return, you’ve registered with HMRC by October 5th.
If you don’t, you could be at risk of those penalties we mentioned above. Although don’t worry – if you file your return online and pay any income tax you owe for the 2023/24 tax year by January 31st of 2025, you’ll usually avoid any penalties. Like we said, owning up to a genuine mistake means you’ll be asked to pay between 0% and 30% of the penalty fee.
To make sure you’re paying the right amount of tax to HMRC:
Once you’re registered, you need to make sure you submit your return on time and pay on time. Otherwise you’ll end up receiving more fines and penalties.
