Accountancy & Tax in Oakham

You should tell HMRC as soon as you start self-employment, otherwise you may face a penalty. You are considered to have started self-employment when you have something to sell and either have a customer for your goods or services, or you are actively marketing your business.

You can let HMRC know about your self-employment by registering online for business taxes. A Self-Assessment Online account will automatically be set up at the same time. This allows you to send your Self-Assessment tax returns online. You will receive an Activation Code. You need to activate the service within 28 days. If you don’t, you will have to ask for a new Activation Code.

You can register online at https://www.gov.uk/log-in-register-hmrc-online-services/register

As a self-employed person, you pay a fixed amount of Class 2 National Insurance contributions (NIC). If your profits are above a certain limit, you may also have to pay Class 4 National Insurance contributions.

See Self-employed National Insurance rates for full details.

It is very important that you set up a record keeping system and keep all records and supporting documents. Records for the current tax year must be retained until 31 January 2022.

You must keep records of all money coming into and going out of your business. This includes all cash, cheques and credit card transactions.

Your records should be adequate to allow you to complete an accurate Self Assessment return. You will be expected to keep a full record of:

• All sales made and other business income, as it is earned.
• The cost of all business expenses and purchases as you pay them, no matter how little they cost.
• All purchases of business stock, goods and raw materials.
• Mileage records.
• Capital expenditure; keep a separate record of all purchases and sales of business equipment, machinery and vehicles, together with the receipts.
• Keep a record of the market value of equipment or vehicles introduced into the business that you owned before starting your business.

See Business records if you're self-employed for full details.

There are key dates that you need to be aware of during the financial year. These relate to reporting and payment of any monies due. A list of dates and full explanation can be found here.

You must register for VAT if:

• Your taxable turnover exceeds the VAT threshold in any 12 month period
• you expect your taxable turnover to exceed the VAT threshold within the next 30 days
• you take over an existing VAT registered business as a going concern

You have 30 days from the date you meet any of these criteria to register.

Usually, VAT registration can be completed online and if you apply online, you will be enrolled automatically so that you can submit your VAT return online (there is no longer a paper version).

The current VAT threshold is £85,000; if your turnover is below the registration limit, you can choose whether to apply for voluntary registration. The standard rate of VAT currently is 20%.

See the official VAT website for full up to date details.

• HMRC website
• GOV.UK website
• Tax Help Factsheets
• Webinars, e-learning, emails and video for self-employed
• Contact HMRC
• Department for Business, Energy & Industrial Strategy