For Individuals

How do I register with HMRC as self-employed?

According to HMRC, you should register as self-employed within three months of becoming self-employed.  This can be done very simply using the online CWF1 form.  You can use the link below.

https://www.tax.service.gov.uk/cwf1

This will register you for Self-Assessment if you are not already registered and also register you for National Insurance purposes.  Once you are registered you should then receive notification by post from HMRC.

Am I paying National Insurance?

If you are self-employed, you will pay Class 2 NIC if your self-employed earnings are above the Small Profits Threshold. In addition, you will pay Class 4 NIC on your profits above the Lower Profits Limit, currently at a rate of 9% up to the Upper Profits Limit and then 2% above.

If you are employed, you will pay Class 1 NIC on your salary when your income is above the Primary Threshold.  However, if your salary is lower and below the Primary Threshold, yet above the Lower Earnings Limit, you will still get the benefits of paying.

You can register to voluntarily make Class 3 NI contributions.

The NI rates are shown in more detail within this HMRC page, link here;

 https://www.gov.uk/rates-and-ni-contributions 

When do I have to file my personal tax return?

The tax year ends on the 5th April and the filing deadline of the Income Tax Return for that year will be 31 January after the year-end for paper tax returns.  If you are filing a paper tax return this must be filed by 31 October after the year-end unless you have a reasonable excuse for not being able to file this online.  

How do you calculate my tax?

We use a software that mirrors the HMRC tax calculations.  The tax rates and calculation methods are standard and not an individual process categorised by us.  Our tax team are appropriately trained and qualified and receive regular professional updates to keep them on top of the constantly changing tax legislation. 

Why do I have to make payments on account?

If your tax and Class 4 NIC bill is in excess of £1,000, if this is your main source of income, you will automatically be due to make payments on account in advance of the following tax year.  In addition, there are times when you may have additional income exceeding the de-minimus for payments on account and not enough taxed at source, so payments on account  become due.  Payments on account are based on 50% of the tax and Class 4 NIC due  and are payable on 31 January following the year-end and then the following 31 July.  If you believe your income for the next year will be much less, you can make an election to reduce your payments on account but if they are reduced incorrectly or too much, interest will become due, and possibly penalties if there is intent to reduce incorrectly.