Questions and Answers
In a brief period of unemployment, I did a little bit of self-employed freelance work. I now have another full-time job. Do I need to report this income?
If your total income from self-employment was less than £1,000, then you should be eligible for the Trading Allowance. It should be noted that this is the amount before deduction of any expenses, not your profit from the business. If the income is below this amount, and does not fall under any of the exclusions below, you do not have to report the income or pay any tax.
The exclusions to this allowance are
• Income from partnership trades
• Income which attracts rent a room relief (rental of space in your home)
• Any amounts received from
• An employer, or a spouse/ civil partner’s employer.
• A partnership in which they (or a connected party) are a partner; or
• A close company in which they (or an associate) are a participator.
If your income is above £1,000, or it falls under one of the exclusions, then it will need to be reported to HMRC, and tax and national insurance will be due. As you have only been self-employed for a short period, it may be possible to arrange for this to be taken through your tax code. This would mean that, instead of paying a lump sum, the amount owed would be spread throughout the tax year as an additional deduction from your wages. You can arrange this by calling them on 0300 200 3310. Otherwise you will need to register for self assessment and complete a tax return.
I started a new business earlier this year, but I have not yet registered with HMRC. Is there a time limit to do this?
Unless you are already registered for self assessment, you need to register to complete a tax return. The time limit for registering is 5 October after the tax year in which you started. If you started your business on 5 April 2018 or earlier, you should already have registered to complete a return. If you started after this date then you have until next year to register, though it is advisable to do it now to ensure it is not forgotten.
If you should have already registered, then you are already potentially subject to a late registration penalty. However, if you rectify this error as soon as possible, and file the relevant return on time (by 31 October 2018 for paper returns or by 31 January 2019 if filed online) then it is more likely that this penalty will not be imposed. This is because your delay in registering will not have delayed your accounting for tax. Do not delay, as the longer you do so the more likely it is that HMRC will discover your failure themselves. Penalties are more likely, and tend to be higher, when a taxpayer is prompted by HMRC to correct an error.
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