Working for yourself
If you have arrived in the UK and decided to work for yourself, firstly you need to make sure that you are actually going to be “self employed” as HMRC will need to be happy that this is the case and that you are not, in fact, an employee.
You should ensure that you get this right as mistakes in respect of employment status can be costly. We have set out the rules which govern the differences between employment and self-employment.
Note that even if you are carrying on a business which you used to run outside the UK, HMRC will deem that when you come to the UK permanently (or leave) that you have commenced (or ceased) your business.
When you become self-employed you must register for Income Tax and National Insurance purposes with HMRC. You should do this as soon as possible from when you start to trade. If you are starting employment after being unemployed you should notify your Jobcentre Plus office.
There are three ways that you can register:
- online using the email link
- telephone - by calling the Newly Self-employed Helpline on 0845 915 4515
- post - by downloading and completing form CWF1.
If you are self-employed in a partnership, each of the partners must register separately.
Information you will need to provide
You will need to provide the information listed below.
Make sure you have all of this to hand if you are registering online as you cannot save the details and return at a later date once you start to complete the online form:
- name, address and National Insurance Number (NINO)
- date of birth
- contact telephone number
- contact email address
- the date your self-employment commenced
- the nature of your business
- your business address
- your business telephone number
If you don’t have a NINO you can find how to obtain one in our Coming to the UK section.
National Insurance contributions
Class 2 NI contributions are paid by the self employed. The amount you pay (£2.50 a week for 2011/12) is the same no matter what level of your profits are. There are various methods of payment. Use the link to checkout How do I pay my NIC? and you can find out more information from HMRC and you can find out more information from HMRC.
If your profits are low enough (below £5,315 for 2011/12) you can obtain a Small Earnings Exception Certificate which means you will not need to pay any Class 2 NIC, you will need to apply for this immediately if you want to avoid a penalty being charged before you become excepted. However you must still register even if your earnings are low enough for a SEE certificate but you will not then have to pay a penalty if your registration is late.
Class 2 NIC gives limited entitlement to benefits.
Class 4 contributions are paid by the self employed in addition to Class 2 but they do not count towards any benefits. You will be liable to these contributions which amount to 9% of your profits, if your profits are over a certain level (£7,225 for 2011/12). There is however an upper limit of £42,475 above which you pay contributions of only 2%.
Class 4 contributions are collected together with any income tax payable on profits through self-assessment.
Further help from HMRC
HMRC have a range of help which we recommend:
Income tax and Value added tax
For more information on how to work out your business profits and expenses and a basic guide to capital allowances - you may find this section useful.
There is a lot more information on self assessment including important dates and what to do if you get an enquiry which you can access using the link. You can also find out more about what to do if you make a loss in your business.
If you want a general summary of tax rates and how they might apply to you have a look at the section on Which tax rates apply to me?
Use this link as a springboard to where to find useful information on VAT on the HMRC website.
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