Self Employed is by far the simplest and most popular form of self-employment. In England, regulations are designed to make opening your own business quick and easy. A National Insurance Number is required to register as self-employed. Registration must be done within 3 months of starting your business, if you register after 3 months of starting your business, the HM Revenue & Customs (HMRC) can fine you £100.
Once you have registered, the Inland Revenue will send you an information letter by post with your UTR number. This can take up to four to six weeks. If you still haven’t received anything after this period, you should call the Inland Revenue and find out whether the office has received your request to open a business. The National Insurance Contributions are divided into Class II and Class IV contributions. Now (tax year 2023/2024) Class II contributions are £3.45 per week, payable if you exceed £12,570 income per year. Class IV contributions are 9% calculated on income between £12,570 – £50,270 per annum. Above £50,270 it is just 2%. If your self-employment earnings are between £6,725 and £12,570 you do not have to pay Class 2 NIC, and you will still be treated as paying Class 2 NICs. This means that you will have access to contribution entitlements in the same way as if you had paid Class II NICs. If you expect your income to be very low and under £6,725 you are not required to pay contributions, but you can pay them voluntarily. In the UK, business National Insurance contributions are relatively low compared to other EU countries, including Poland. It is more advantageous to pay them regularly so that you are entitled to a pension in the future or social security benefits if you become incapacitated.
After 5 April each year, we are obliged to do a tax return. Self-employed people are subject to Personal Income Tax (PIT) at a rate of 20% on the amount of income over £12570.
A very important element of any self-employed person’s tax return is to show the costs associated with the activity we are carrying out. Correct reporting of costs will allow us to pay less tax or, in the case of CIS (construction services), to recover the overpaid tax. The tax return should be done by an accountancy firm to correctly declare costs and avoid problems.
Filing tax returns and many other accounting matters can make it too difficult for you to manage. You don’t have to fear or worry about anything because we are here to make running your business easier. We can also help you set up Self-Employment if you are planning such a business.
We look forward to hearing from you.
For more information call 0203 4902 919 or 07716161381.
