Help, I’m self employed!

If you go from being employed to self employed it can be a big culture shock both in terms of the lack of security in terms of not receiving that guaranteed pay check and also to get your head around all things HMRC.

If you are self employed with a trading income of over £1000 over 12 month period you are required to tell HMRC.

You do this by registering as self employed per the link below.

https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed.

You will then be issued with a tax return reminder each year to file a self assessment return by 31st January each year if you do it online or by 31st October if you submit by paper.

It is easier if you keep your accounting records in line with the tax year. The tax year runs from 6th April one year to 5th April the next, or for ease, a lot of people prefer to do 1st April to 31st March. This is also allowed.

You will then need to get into the habit of keeping an eye on both your income and your business expenses. If you are under the VAT threshold and your turnover is less than £85k a year then you do not necessarily at the current time need to invest in accountancy software. A simple spreadsheet will do the job.

All receipts for business expenses should be kept. You can also claim for things like:-

  • Working from home allowance
  • Mileage in the course of your business

And in some professions, uniform and laundry costs.

More information on this can be found at:-

http://www.gov.uk/simpler-income-tax-simplified-expenses

A separate bank account is a must if you want to have clarity in separating your business and personal expenses.

It doesn’t need to be a headache so long as you keep on top of things.

If in doubt or you need help it is always best to speak to an accountant.