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If you’re a self-employed sole trader and need to register for Self Assessment, you can either register online, or use a CWF1 form.
You should register for Self Assessment by 5th October in your second tax year of business. The tax year runs from 6th April to 5th April, so if you started trading in November 2020, your first tax year was 2020/21, and your second tax year is 2021/22. You’ll need to make sure you register before 5th October 2021.
If the only income you earn is from an employer, and they deduct tax and NI from your wages, then you don’t need to worry. But if you have additional income that you earn from self-employment, then you must register for Self Assessment and pay tax on these earnings.
The good news is that you won’t need to register if your sole trader activities earn less than £1,000 per year, thanks to the trading allowance.
As a sole trader you’re responsible for paying the right amount of tax and National Insurance on your self-employed earnings. Registering for Self Assessment enables you to submit a yearly tax return so that HMRC know how much you owe, and collect the payment from you.
Failure to notify HMRC that you need to register for Self Assessment as a sole trader, even if it wasn’t deliberate, can incur a penalty.
These penalties are chargeable in addition to paying the tax which is due, with extra fines added the longer you leave it. You might be able to reduce a penalty by making a voluntary disclosure.
You will need a National Insurance number if you’re a sole trader registering for Self Assessment. If you don’t already have one, (for instance, you’ve moved to the UK from abroad) you can apply for your NI number online.
HMRC will issue you with a Unique Taxpayer Reference (UTR) number, and you’ll need to complete a Self Assessment tax return every year, unless you tell HMRC that you have stopped trading. If you continue trading, you’ll need to submit a return, even if you made a loss or your earnings were under the Trading Allowance.
Get an online quote for accounting services for your sole trader business, or talk to an advisor using our live chat feature or by calling 020 3355 4047.
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It is unlikely you will need this service, unless you are voluntarily registered for VAT.
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You only need this service if you want us to complete the bookkeeping on your behalf.
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