Frequently Asked Questions
What to expect at the ‘Evidence of identity’ interview?
The interview will usually be one-to-one (unless, for example, you need an interpreter). You will be asked questions about why you need a National Insurance number, your background and circumstances.
You will also have to prove your identity. Bring as many ‘identity documents’ (originals, not photocopies) as you can to your interview. Examples of documents which count are:
- valid passport (UK or foreign)
- national identity card (UK or foreign)
- residence permit or residence card including biometric immigration residency documents
- full birth or adoption certificate.
- full marriage or civil partnership certificate
- driving licence (UK or foreign)
If you don’t have any of these – or other – identity documents you still must go to the interview. The information you are able to provide might be enough to prove your identity.
During the interview a National Insurance number application form will be completed and you will be asked to sign it.
- Do you have the final say in how the business is run?
- Are you responsible for meeting any losses as well as taking any profits?
- Can you hire someone on your own terms to do work for you?
- Do you risk your own money?
- Do you provide the main items of equipment you need to do your job?
- Do you agree to do a job for a fixed price regardless of how long it may take?
- Can you decide what work to do, how and when to work and where to provide the services?
- Do you regularly work for a number of different people?
- Do you have to correct unsatisfactory work in your own time and at your own expense?
You can be self-employed for some of your work, but an employee of another business as well.
You normally have to pay tax and National Insurance contributions as if you’re an employee if
- you work through an agency
- you’re a company director
- you’re the secretary of a club or the holder of any other office
If you send a paper tax return it must reach HMRC by midnight on 31 October.
So for the 2012-13 tax year (ending on 5 April 2013), the deadline for paper returns is midnight on 31 October 2013.
There are very few exceptions. As an example, the deadline may be later if HMRC send you the letter, telling you to complete a tax return, after 31 July. In this case the letter will tell you the deadline – it is usually 3 months from the date of the letter. Or if you’re sending a Self-Assessment return for a registered pension scheme or non-resident company, you can only send paper returns so the deadline isn’t until 31 January.
31 January: online returns
Your online tax return must reach HMRC by midnight on 31 January.
So for the 2012-13 tax year, the deadline for online returns is midnight on 31 January 2014. There are very few exceptions. As an example, the deadline may be later if HMRC sends you the letter, telling you to complete a tax return, after 31 October. In this case the letter will tell you the deadline – it is usually 3 months from the date of the letter.
There’s also an earlier deadline of 30 December if you want HMRC to collect any tax you owe through your tax code. You can ask for this if you owe less than £3,000. Please show this clearly on your tax return. HMRC will try to collect the tax due through your code, but they can’t always do so.
If you are due a repayment of tax, you’ll usually get this automatically. But it may be set off against other tax instead if there is an amount due soon.
If you have tax to pay, it will either be collected through your tax code or you will have to pay it by 31 January.
You must pay any tax you owe by 31 January following the end of the tax year.
For example, for the tax year 2012-13 (ending on 5 April 2013) you must pay any tax you owe by 31 January 2014.
The payment deadline is the same for both paper and online returns and there are very few exceptions. As an example, the deadline may be later if HMRC sent you the letter, telling you to complete a tax return, after 31 October. In this case your payment date is usually due 3 months from the date of the letter.
On the 31 January, you’ll need to pay one or both of the following:
- any tax you still owe for the previous tax year
- the first of two ‘payments on account’
Payments on account are part payments towards your next tax bill. You don’t always have to pay these – it’ll depend on the amount of tax due and the kind of income you receive.
HMRC will usually send you a ‘Self-Assessment Statement’ that shows how much you owe or you can check your tax bill online.
This is your deadline for making any further payments on account. For example on 31 July 2013, you’d make your second payment on account for the 2012-13 tax year.
|Penalties for missing the tax return deadline|
|Length of delay||Penalty you will have to pay|
|1 day late||A penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.|
|3 months late||£10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.|
|6 months late||£300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.|
|12 months late||£300 or 5% of the tax due, whichever is the higher.
In serious cases you may be asked to pay up to 100% of the tax due instead. In some cases the penalties can be even higher than this.
These are as well as the penalties above.
Mrs A’s tax return is due on 31 January 2014 but HMRC doesn’t receive it until 5 August 2014.
It is over 6 months late so she will have to pay all of the following:
- £100 fixed penalty
- £900 penalty – this is £10 each day from 1 May to 29 July, when the maximum 90 day penalty is reached.
- £300 or 5% of the tax due – whichever is the higher
You may think you have a reasonable excuse for sending your tax return late. You can find out more about reasonable excuses in the ‘How to appeal’ article (see link below). You don’t need to wait until you get a penalty, you should let HMRC know as soon as you can.
As a general rule, we recommend you put 30% of everything you earn to one side, and this should cover your tax and National Insurance, but you will be able to adjust this over time as you get a better feel for your tax liabilities.
Your take home pay is your profit – i.e. income less expenses, tax and National Insurance. See below for a rough illustration, these figures are based on estimated expenses of 10% of your turnover.
Annual income Annual take home pay Monthly take home pay
£20,000 £15,666 £1,280
£40,000 £28,146 £2,345
£60,000 £39,295 £3,275
£80,000 £49,735 £4,145
Essentially this means you can claim for electricity, heating and water, council tax and mortgage interest for the use of your home as an office space. You will need to take into account how many hours a week you are using the space and then calculate the cost of the room per hour. These amounts would normally be charged in your accounts to ‘use of home as office’.
To be honest the ‘use of home’ allowance is a little complicated, and changes yet again if you become a Limited company and continue to work from home, so it is probably best to speak with an accountant to get the most accurate and up to date information.
Companies House tells HMRC when any limited company is formed and registered with them. But if you use the Companies House Web Incorporation Service and your company is ‘active’ at the time you incorporate it, for example it has started trading or receiving income, you can choose to supply the statutory information you need to give HMRC when you become active at the same time.
HMRC uses the information they receive from Companies House to set up a computer record for your company and allocates it a reference number known as a Unique Taxpayer Reference (UTR). They then send form CT41G (Corporation Tax – Information for New Companies) to your company’s registered office. This form includes your company’s UTR so please keep it safe as you will need it to contact HMRC. It also tells you what you need to do if your company has become ‘active’ and suggests other tax implications your company may need to consider.
Once over the threshold amount, it is mandatory that you register for VAT and start charging VAT on your goods and services, from the day you have registered. For more information on VAT, visit our easy to read guides on the following pages:
If you don’t pay your Corporation Tax on time, HMRC will charge interest from the day that it’s due until you pay it.
Your Corporation Tax payment is normally due by nine months and one day after the end of your accounting period. So if your Company Tax Return covers your accounting period 1 January 2012 to 31 December 2013, then Corporation Tax must be paid no later than 1 October 2014.