REGISTERING AS SELF EMPLOYED

Self-Employed pages ► Self Employed sole traders ■ Registration and National Insurance ■

Once you set up as self-employed you will be responsible for paying your own income tax and National Insurance (NICs). You must register with HMRC within three months of starting trading, even if you already pay tax via self assessment and this can be done online or by calling HMRC.

Establishing your employment status

It is important to know your employment status because it affects how you pay tax and NICs. Use HMRC’s Employment Status Indicator tool at the outset to confirm your self-employed status.

Paying income tax and National Insurance Contributions

If you are self-employed you have to calculate your income tax and submit a self assessment tax return to HM Revenue & Customs.

In addition there are two types of National Insurance contribution you may have to pay. These are based on your profits and are collected at the same time as income tax.

Class 2 NICs - Unless your profits from self-employment are below the Small Profit Threshold of £6,365 for 2019/20 you will have to pay Class 2 NICs. For 2019-20, class 2 National Insurance is due at £3.00 per week.

Class 4 NICs - If your taxable profits are above the lower Class 4 profit limit (£8,632 for 2019-20) you will pay Class 4 contributions of 9% on profits over this limit. If profits are over £50,000 in 2019-20 then the rate of Class 4 National Insurance falls to 2% on profits over this higher limit.