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The Importance of Registering for Self-Assessment in the UK

Updated: Jan 4

In the UK, if you're earning income from self-employment, rental properties, investments, or any other sources that aren't taxed through Pay As You Earn (PAYE), you must register for self-assessment with HM Revenue and Customs.

What Happens If I Don't Register for Self-Assessment?

Failing to register for self-assessment can have serious consequences:

  • Penalties: HMRC can impose penalties for late registration or late filing. These penalties can be substantial, particularly if you've been earning income for a while.

  • Inaccurate Tax Calculation: Without self-assessment, you risk not paying the correct amount of tax. This could result in underpayment, leading to interest charges, or overpayment, which may take time to refund.

  • Legal Consequences: In extreme cases, failure to register for self-assessment and pay the correct taxes can lead to legal action, including criminal prosecution.

Can I Backdate My Self-Employment Registration?

In some situations, you may realise that you should have registered for self-assessment in the past. Fortunately, HMRC does allow you to backdate your self-employment registration under specific circumstances. However, there are important considerations:

  • Time Limit: You can typically backdate your registration for up to six years, but this depends on your specific situation. It's essential to contact HMRC as soon as you realize you need to register and explain your circumstances.

  • Valid Reasons: HMRC will consider valid reasons for backdating registration, such as genuine oversight or incorrect advice. However, they may not be lenient if they believe you've deliberately avoided paying taxes.

  • Penalties and Interest: If you do successfully backdate your registration, you may still be liable for any outstanding taxes, interest, and penalties.

Self-Assessment Registration Deadline

If you are self-employment in the UK, it's important to register with HMRC as a self-employed individual when you start trading. Registration should be within 3 month of commencing trading, and at the latest, by the 5th of October following the conclusion of the tax year during which you became self-employed.

If you've been earning income outside of PAYE and haven't registered, it's essential to act promptly to rectify the situation. Additionally, if you believe you should have registered in the past, it's worth contacting HMRC to explore the possibility of backdating your self-employment registration. Being proactive in your tax affairs will help you avoid unnecessary complications and ensure you meet your tax obligations.

Is It Possible to Register as Self-Employed While Employed?

Even if you are currently employed, whether on a full-time or part-time basis, you can still register yourself as self-employed if you engage in self-employed work or own a business. Registering as self-employed remains a legal requirement.

If there is a conflict of interest with your existing employment contract that explicitly prohibits self-employment, you would need to make a choice between continuing your current employment or pursuing self-employment.

Self-Assessment Preparation Service

At Styles & Associates Accountancy we provide a complete self-assessment service:

  • We can assess if you are required to file a self-assessment tax return

  • Register for an online self-assessment account

  • Prepare and file your assessment.

Find out more about who should register for self-assessment, and how to register:

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