This page is part of the DIY tax guide. After looking through it you might decide you want to leave it all to an accountant. That’s fine: it is one of the things they do all the time.
When to register
You should register with HM Revenue & Customs as soon as possible after starting in business. There used to be a time limit of 3 months, and a penalty of £100 for missing it, but this has now gone. Instead you must register by 5 October following the end of the tax year in which you start your business.
So if you start working just before a tax year ends, say on 1 March, the last date before you must get your registration done is 5 October of the same year. Giving you a window of about 7 months. However if you start 2 months later, on 1 May which is just inside the new tax year, you have until 5 October of the following year before you absolutely must register. A window in this case of 17 months.
How to register
The HMRC Starting in business page has links to various documents which you might want to read. It also contains links to their on-line registration form, or the printable registration form if you trust the Post Office more than you trust the internet – you can complete the printable one on screen but it doesn’t get saved and you need to print it out and then sign it.
Whichever form you choose here are some tips for filling it in:
- Probably obvious, but you do need to register using your real name and home address!
- Giving your telephone number (or email addresses unless you register online) is not compulsory and I can’t see any advantage to you in supplying them.
- In the business section you need to give the date your business started and the nature of your self-employed work. There is no need to put prostitute: my advice is to put something you feel comfortable with that broadly describes what you do. Acceptable descriptions might be ‘Escort’, ‘Fitness Consultant’, ‘Alternative Therapist’, ‘Hospitality Consultant’, ‘Executive Stress Counsellor’ or any permutation. But don’t try to be too clever by putting something that you’re clearly not qualified to do or which has a completely different pattern of expenses to what you actually do. Putting astronaut or chip shop owner is asking for trouble.
- Do not tick the box to say you are a share fisherman, unless you really are.
- Business address. You probably don’t have any business premises so this will almost certainly be your home address. Don’t worry, this doesn’t mean you’ll get charged business rates.
- The form then asks for your business name. Your working name is probably completely different to your real name but I don’t believe there is any need for you to give your working name on the form. You have a responsibility to register and pay tax. You don’t have a legal responsibility to give the Revenue a link to your website and to every post you have ever made on message boards. I would simply put your real name in this box. After all, if you were to engage an accountant he would presumably produce your accounts in the name of Ms Tilly Lamp, Personal Therapist and not Mistress Mavis, Intimate Shagvixen.
- The final question in the business section is about doing all or most of your work for one person. This doesn’t apply, even if you get work through an agency, because you are doing work for the punter not for the agency.
- Finally, no, you don’t want details of the construction industry scheme, taking on employees or VAT. You may be forced to register later on if your turnover goes over the registration limit, but you do not want to register immediately.
You can also register by telephone using the Newly Self-Employed Helpline 0845 915 4515 (or 0845 766 0830 if you want to practice your Welsh.)
Paying Class 2 NI
Once you are self-employed you have to start paying self-employed (Class 2) National Insurance which is a fixed amount of £2.65 per week (from April 2012, previously £2.50). You can complete a direct debit form if you want to pay this monthly. Otherwise you will get a bill for £65.00 every six months.
If your business earnings after taking off your allowable expenses (of which much more later) come to less than £5,595 then you don’t have to pay Class 2 NI. This is quite likely if you start your business late on in the tax year (which runs to 5 April each year) or if your escorting is part-time. The form to apply is here or here CF10 Cymraeg – Pobl hunangyflogedig gydag enillion bach.
If you already have another self-employed business and you are already paying Class 2 NI, then you don’t have to pay it again for your new business.