Tax requirements for self-employed
If you have just emerged into the business world and are looking to start your own business, you should go ahead and do it. There is nothing easier than becoming a self-employed professional. However, just because you are self-employed, don’t think you can skip out on your National Insurance contributions.
Advantages of being self-employed
- By being self-employed, you will not have to face the tiring burden of getting all your paper work in order
- There is no need to pay a registration fee, but registration with HM Revenue and Customs is mandatory
- On an average, self-employed people have been found to earn almost 40% more than those who are traditionally employed
The perks are plenty, but you need to ensure that you have registered yourself as a self-employed person or a sole trader with HMRC within three months of starting your venture. Otherwise you are likely to incur a penalty.
Tax returns for sole traders
A necessity when you are a self-employed trader is doing a self-assessment tax return to HMRC. This assessment needs to include your income as well as the capital gains. This tax return form can alternatively be used to claim tax allowances or relief. However, it is an essential step when starting your business.
These self-assessment tax returns usually come in April. Since you are just beginning your venture, this will be your first tax return. You need to have your National Insurance number with you while filling this form since there is a self-assessment registration form that needs to be filled in as well.
It is only on completion of these submissions that your tax records shall be set up by the HRMC and you will be handed a Unique Taxpayer Reference. (UTR)
The end of the tax year is usually in April. However, if you have been unable to pay the required amount and still owe money by the end of the year, you can extend the date to 31st January of the following year.
Irrespective of whether you have filed your returns online or not, the deadline doesn’t change.