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 The trend of workers joining the ranks of the self-employed is increasing dramatically, but it's important to remember that with this newfound freedom comes some newfound responsibilities - and heavy penalties for failing to keep up to date. If you have become self-employed during the course of the last year, you have until 5 October 2018 to register as self-employed with HMRC.

 

The 2017/2018 tax year ends on 5 April 2018, so if you became self-employed before then you have until 5 October 2018 to register. Registration isn't very difficult, and failing to register can result in harsh penalties of up to 30% unless any outstanding tax is paid by 31 January 2019. The average fine levied by HMRC on these individuals amounts was £284, and one in seven had fines of over £500 set. Two percent of those fined were penalised over £800, which is quite harsh for most self-employed individuals.

 

A surprisingly large number of self-employed individuals have failed to meet this deadline on more than one occasion, according to research by small business consulting group Informi. In 2017, HMRC published some additional data on the issue, highlighting the fact that as many as 840,000 people (roughly 7% of the population required to file in this manner) failed to complete filing and payments by 31 January. This means that on 1 February, HMRC was suddenly able to claim approximately £84 million in fines from this issue alone.

 

“The first step – of registering for self-assessment – must be completed by October 5 if you were self-employed or earned additional income in the last tax year. Missing this deadline isn’t the end of the world, but with many small businesses being cash-poor, especially in their early stages, it’s a shame to waste money by failing to register in time,” explains Darren Nichols, product manager for Informi.

 

During registration for self-assessment, HMRC will assign self-employed individuals a Unique Tax Reference (UTR) number, which is required during the filing process. This may take several days for processing, so it's important not to leave it to the very last minute. The process for registration is quite simple, and the fines for being late can be quite harsh - so there's absolutely no reason not to handle it as soon as possible!