How to become self-employed

How to become self-employed

Self-employment is a situation when a person is recognized as self-employed to manage his entrepreneurial activity in accordance with commercial law.

This means that a person (natural person) is an enterprise and is engaged in commercial activities. In other words, a person and a business are perceived as one and the same.

Conditions necessary to become a self-employed person

• have a National Insurance Number
• have a valid ID
• live in Great Britain

Opportunities for the self-employed

• have employees
• sell goods and services
• be a full-time employee of the company and at the same time self-employed
• be part of a Limited Liability Partnership (LLP)
• have a VAT registration number
• count business expenses for tax purposes
• have your personal home address as your business address
• refers to another rule of the immigration code (consult specialists in this area)
• Have a business (trade) name instead of a personal name

Main obligations of a self-employed person

• keep track of your business income and expenses
• submit a tax return every year
• pay income tax and national insurance contributions on time

The amount of tax a self-employed person pays is based on total income, not just what is earned from business activities (for example, if a person has additional rental income). In other words, taxes are paid from all sources of income.

This situation is also affected by categories of income, such as "Shares", which fall under a different tax classification.

Self-Employed registration process

You can start your work at any time, and register for tax reporting later.

Registration deadline:

You must register as self-employed by October 5 of the year following the end of the tax year in which you became self-employed. For example, if you started working as a self-employed hairdresser in May 2022, you must complete your registration by October 5, 2023.

How to register (registration for self-reporting):

This process is absolutely free. You can only register online if you have two of the following documents: a UK passport, driving license or credit history. One of the reasons to consider exchanging your driving license earlier than 12 months is to be able to access the Government Gateway and your tax account. Since the majority of Ukrainians currently do not have the opportunity to undergo verification on the government portal, the following registration methods are available to them:

• Sending by mail: You need to open this site on your computer, print it out and send it to the following address: gov.uk. Your UTR number will be mailed to you within 10 business days.
• Registration by phone: You can call HMRC and register over the phone.

Business license

Licenses are not required for many types of business, but there are certain areas of activity where they are still required. For example, you will probably need a license if you plan to become a childcare provider, tattoo artist, or open a pet store.

Here are some types of activities for which a license or registration with regulatory authorities is mandatory (this list is not exhaustive, but is provided only as examples): Sale of alcohol; Business related to food products;Playing music in public;Trade in public places;Training of truck drivers or driving instructors;Processing of personal data of clients;Some financial activities, such as lending or financial advice, require a license from the Financial Conduct Authority (FCA).

Taxes for the self-employed

If you are self-employed, you are entitled to the same tax-free minimum as employees. This is the amount you can earn before you start paying income tax. In the 2022-2023 tax year, the tax-free threshold is £12,570, which means 0% tax on income between £0 and £12,570 for that year. If your income is over £100,000, the tax-free minimum is reduced by £1 for every £2 of income over this limit.

The basic rate of tax is 20% on income between £12,571 and £50,270, the increased rate is 40% on income between £50,001 and £150,000, and the additional rate is 45% on income above £150,000 .

If you have two jobs, one of which is salaried and the other is self-employed, the tax situation becomes more complicated. You only get one tax-free minimum as a taxpayer, not for each job separately. This minimum usually applies to what HMRC considers to be your main job, i.e. the job that brings you the most income.

Cooperation with legal marketplace 'Consultant'

Cooperation with the legal marketplace "Consultant" can be an important step for those who want to become self-employed, because the platform provides access to qualified lawyers who will help understand all legal aspects of registration, preparation of necessary documents and bookkeeping. Lawyers can also provide advice on tax obligations and optimization of financial expenses, which will allow you to focus on business development, knowing that all legal matters are in the reliable hands of professionals.

Call a lawyer today!

If you need professional legal assistance, contact our specialists. We cooperate with the best lawyers who are ready to support you at all stages of solving your case. Contact us today to take advantage of the knowledge and experience of our specialists! Call +447418377298 for a qualified consultation right now!