7th February 2022 Posted by - Alexander Accountancy
Newly self-employed taxpayers should notify HMRC as soon as practicable when they begin working for themselves. However, HMRC must be officially notified by 5 October following the end of the tax year so that a Self-Assessment return can be issued on time and to avoid any unnecessary penalties.
HMRC’s guidance says that you are probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure;
- have several customers at the same time;
- can decide how, where and when you do your work;
- can hire other people at your own expense to help you or to do the work for you;
- provide the main items of equipment to do your work;
- are responsible for finishing any unsatisfactory work in your own time;
- charge an agreed fixed price for your work;
- sell goods or services to make a profit (including through websites or apps).
The newly self-employed should also register to pay National Insurance contributions (NICs) and to monitor whether a VAT registration is required.
There is a £1,000 tax allowances for miscellaneous trading income that has been available to taxpayers since April 2017. This is known as the trading allowance.
The exemption from tax applies to taxpayers who have trading income of up to £1,000 from:
- self-employment;
- casual services, for example, babysitting or gardening;
- hiring personal equipment, for example, power tools.
Where this £1,000 allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared to HMRC.
Source: HM Revenue & Customs Feb 2022
