Self-assessment is a system used by Her Majesty’s Revenue and Customs (HMRC) to collect Income Tax from individuals with non-standard income sources, such as the self-employed, some company directors, and those receiving a certain amount of rental income. There are many other reasons why you may need to complete a self-assessment, and more information is available in our article: When do you need to complete a self-assessment tax return? Please keep reading as we explain how to register for self-assessment in the UK.
Generally, anyone receiving income that isn’t taxed at source needs to complete a self-assessment. Registering for self-assessment is an essential step to ensure you meet your tax obligations. Registering early ensures you have ample time to prepare and submit your tax return before the deadline and avoid potential penalties. This comprehensive guide will walk you through the process of registering for self-assessment, covering various scenarios related to self-assessment registration in the United Kingdom.
It is essential to register for self-assessment as soon as you meet the criteria that requires you to complete a tax return. This may include starting a business as a sole trader, becoming a partner in a partnership, receiving rental income, or having a high-income level. Ideally, you should register as soon as possible after the end of the tax year in which you first meet these requirements, but no later than 5 October in the following tax year.
Who Needs to Register for Self-Assessment?
Before you begin the registration process, it’s crucial to determine if you need to register for self-assessment. The following individuals typically need to register:
- Self-employed individuals and sole traders: If you earn income through self-employment, either as a sole trader or as part of a business partnership, you must register for self-assessment.
- Company directors: Some company directors need to register for self-assessment. For example, you should register for self-assessment if you receive income from savings, investments or dividends exceeding £10,000. If you are a company director and need to know whether you are required to submit a return or not, click on this HMRC tool to find out.
- Individuals receiving rental income: If you receive an income of £1,000 or more from renting out property, you should register for self-assessment. This includes buy-to-let landlords, those renting a room in their homes, and those renting out commercial properties.
- Individuals with income from savings, investments, or dividends: If you receive income from savings, investments, or dividends that exceed £10,000, you should register for self-assessment.
- Other cases requiring self-assessment registration: Some additional scenarios necessitate registration, such as those with overseas income, those who need to claim tax reliefs, or individuals who receive untaxed income that cannot be collected through PAYE. For more information, please read our article: When do you need to complete a self-assessment tax return?
Registering for Self-Assessment: Step-by-Step Guide
Determine your eligibility
Assess your income sources and circumstances: Review your financial situation to determine if you meet the criteria for self-assessment registration. Consider your income sources, such as self-employment, dividends, rental income, and other untaxed income.
Review the criteria for self-assessment registration: Consult the HMRC website or seek professional advice to confirm if you need to register for self-assessment. Ensure you understand your specific circumstances and how they relate to the registration criteria.
Obtain a Unique Taxpayer Reference (UTR)
Register as self-employed, a sole trader, or a partner in a partnership: If you’re self-employed or a partner, you need to register with HMRC, which will provide you with a Unique Taxpayer Reference (UTR) number.
Registering by Post
You can register online or by post using the form CWF1 for sole traders, form SA401 for individual partners and form SA402 if the partner is not an individual, for example, a company or a trust. When registering, you’ll need to provide personal information such as your name, address, date of birth, and National Insurance number.
To Register as a company director or for other sources of untaxed income, you’ll need to register for self-assessment using form SA1. This form requires similar personal information to form CWF1. Once registered, you won’t need to re-register every year.
Postal forms should be sent to: Self-Assessment, HM Revenue and Customs, BX9 1AS.
Registering by Phone
You can also register by calling HMRC on 0300 200 3310 or textphone 0300 200 3319, 8am to 8pm Monday to Friday, 8am to 4pm on Saturday and 9am to 5pm on Sunday.
Receive your UTR by post: After registering, HMRC will send your UTR by post within 10 working days (or up to 21 days for non-UK residents). The UTR is a 10-digit number that will be used to identify you in your dealings with HMRC.
Register for an online account with HMRC
Create a Government Gateway account: Visit the HMRC website and follow the instructions to create a Government Gateway account. You’ll need to provide personal information such as your name, email address, and National Insurance number.
Enrol for the online self-assessment service: Once your Government Gateway account is set up, log in and enrol for the online self-assessment service. This service will allow you to submit tax returns, update personal details, and view your tax records online.
Receive an activation code by post: HMRC will send you an activation code by post within 10 working days. This code is required to activate your online self-assessment account.
Activate your online self-assessment account
Enter the activation code on the HMRC website: Login to your Government Gateway account, select the self-assessment service and enter the activation code you received by post.
Set up your account security features: Choose a password and set up security questions to protect your online self-assessment account.
Access your online self-assessment account: Once activated, you can access your online self-assessment account to submit tax returns, update personal details, and view your tax records.
Deadlines for self-assessment registration
New self-employed individuals and sole traders: You must register for self-assessment by 5 October in the second tax year of your business operations. You should then submit your return by post before 31 October and online return by 31 January of the following year. For example, if you started your business in June 2022, you need to register by 5 October 2023 and submit your postal return by 31 October 2023 and online return by 31 January 2024.
Company directors and other individuals with untaxed income: Once you’ve determined you need to register for self-assessment, you should do so as soon as possible after the tax year in which you have untaxed income. However, it’s generally advised to register by 5 October following the end of the tax year to ensure you meet HMRC deadlines.
Late registration penalties and consequences: If you register late, you may face penalties from HMRC, including a £100 fixed penalty for late tax return submission. Additional penalties may apply for continued delays, ranging from 5% of the tax due to potential criminal prosecution in extreme cases.
Tips for a smooth self-assessment registration process
The tips below will help with the registration process.
- Plan ahead: Give yourself ample time to gather the necessary information and complete the registration process before the deadline.
- Keep accurate records: Maintain accurate and up-to-date financial records to ensure you can easily provide the required information during registration.
- Seek professional advice: If you’re unsure about any aspect of the registration process or your self-assessment requirements, consult a tax professional for guidance.
- Stay informed: Keep yourself informed about any changes to tax regulations or self-assessment requirements to ensure you remain compliant with HMRC rules.
How do you complete and file a self-assessment tax return?
You can complete and file your tax return by post or online. To do this, you will need to enter details of your income and expenses. You can do this yourself or hire a tax adviser or an accountant to do this on your behalf. Depending on your situation, it may be best to seek professional help, as a professional accountant may be able to claim allowable expenses you’re unaware of and reduce your tax liability. This will probably save you more money than the fees of a competent accountant, which is a tax-deductible expense as well. For more information on this, please refer to our article: How do you complete and file your self-assessment tax return?
Registering for self-assessment is crucial in fulfilling your tax obligations in the United Kingdom. By understanding the process and deadlines, you can ensure you register in a timely manner and avoid penalties. Using the online self-assessment service can help streamline your tax affairs, allowing you to submit tax returns, manage your tax account, and access important information at your convenience. If you’re unsure about your self-assessment requirements, seek the professional advice of an accountant or tax advisor to ensure you meet your tax obligations.