How to register with HMRC for Tax and National Insurance

If you are new to self-employment you must register with HMRC for a UTR (Unique Tax Reference) number to confirm you are eligible to work in this manner. If you fail to register within three months of taking up your first assignment you may incur a penalty of £100. If you do not register at all you will be breaking the law and could be liable for further penalties.

To register you must complete the following forms:

  • CWF1 – Becoming self employed and registering for National Insurance and/or tax
  • CA5601 – Application to pay National Insurance contributions by direct debit

These forms can be obtained through the HMRC website. If you need assistance with registration call the national helpline number on 0845 915 4655.

Once you are registered for a UTR number, HMRC will automatically send you a request in April each year to complete and file your self-assessment tax return.  You will have until the 31st of January the following year, at the latest, to submit your return.  Your tax liability will be calculated from the information you supply to HMRC.  You will need to put aside a portion of your earnings each month to meet your tax liability when it becomes due. We recommend setting aside approximately 25% of your income in anticipation of that tax bill.

It is important to keep a record of your business-related expenses and include these details on your tax return, this will reduce your tax bill as you get tax relief on legitimate expense claims.  Please take a look at our self-employed expense guide for further information.

National Insurance – how do I register?

Your self-employed status means you have to make your own NIC’s to HMRC, direct debit is the easiest method. You will be responsible for Class 2 NI, currently £2.50 per week. Depending on how much profit you make in the year you may also have to pay a small amount of Class 4 NI.

To register for NI contributions contact HMRC on 0300 200 3500.

Construction Industry Scheme (CIS) Tax and NI Responsibilities

Please note: if you are registered with our self-employed CIS tax solution and have supplied us with your UTR number, we will deduct you tax at source and pay this directly to HMRC on your behalf.  You will still be responsible for registering and paying your own National Insurance contributions directly with HMRC.  It is also advisable to keep a record of your business-related expenses throughout the year and complete a self-assessment tax return as you may be due a rebate at the end of the tax year.

Tax Return Service

Please contact us on 01923 277 900 if you need professional help to complete the return as we can offer this service at a discounted rate. Find out more about the contractor tax solutions we offer.

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William Cadden, Self-Employed Contractor

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