Looking for a job in “your area” in another country can be tricky. Alternatively, you have the possibility of starting a business yourself, either as self-employed or as a limited company. So today I will try to explain, as simply as I can, the procedures for self-employment in Britain.
You can be employed and self-employed at the same time.
If you have a job for which you already pay your taxes in the UK, you can register as self-employed if you do another kind of work that brings in income. It is considered that you “work for yourself” when:
- You have a full-time business. This is obvious, but I had to add it.
- You have different clients. If there was just one, that one would just be your employer.
- You can decide when, where and how to work. On your own.
- You make a profit selling things online, in markets or through advertisements.
- You offer any kind of service for which you get paid, whatever it is. Commissions for being an intermediary also count.
There are many other possible cases. Basically, anything that produces enough revenue to let you live. Therefore, we must notify HMRC and change our contributions status (ESI). Ways to contact HMRC: gov.uk/hm-revenue-customs/contact
A) Becoming self-employed
This is what you need to do to become self-employed in England:
- Tell HRMC that you are going to become self-employed.
- Check that your INCOME TAX corresponds or will correspond with your contribution to National Insurance (NI) You can do so using “Self-Assessment”.
- Keep track of all your financial activity. Information about “Self Employment Records”.
- Pay your taxes. Usually twice a year, the 31 of January and the 31 of July. Here is a HMRC’s Tax Calculator.
There are two types of self-employed NI contribution depending on your income:
- Class 2: £2.75 a week (£12/month approx.), if your income is less than £5.885 a year.
- Class 4: £2.75 a week, plus 9% of the gains from £7.956 to £ 41.865 and an additional 2% if you exceed that amount.
If your income is low (Class 2) you pay little NI, but at the same time you may not have any health coverage, unemployment or retirement pension. For this reason, you can make voluntary NI contributions. Look at the table of benefits for those who pay Class 2 NI:
Pay the Value Added Tax (VAT)
You do not need to register to pay this if your income is less than £81,000 a year. But it may be advisable to register even if you don’t get to that amount, because then you will be able to deduct the VAT from other invoices and expenses you may have. The normal VAT in the UK is 20% as of 2011.
To register for VAT you can see the video below or on the government’s website: www.gov.uk/vat-registration
When the time to pay taxes comes, you must send your Self-Assessment Tax Return. It is a form where you will introduce the year’s billing of the year, as well as all your business expenses. You will get this the first year of your activity and from that first year on, it will be every six months. Apart from that, you will also pay the NI fees and, if required, the VAT taxes as well. www.gov.uk/self-assessment-tax-returns
- Working for yourself: https://www.gov.uk/working-for-yourself
- All the official information on how to manage your activity as self-employed: http://www.hmrc.gov.uk/startingup/
- Tips to consider before you start working on your own: www.theguardian.com/self-employment-what-you-need-to-know
- HMRC Self-employed tax and National Insurance: http://www.hmrc.gov.uk/working/intro/selfemployed.htm
- HMRC When to register for UK VAT: http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm
B) How to start a Limited Company
First of all, let’s see what a Limited Company is:
“A limited liability company is an organization that can be configured to run tour business. You will be responsible in your own right for everything you do and your finances are separate from your personal finances. Any benefit derived, is owned by the company, after income tax is paid. Then, the company can share their profits with the owners or shareholders.”
If what you want is something beyond being self-employed and you’d like to start a LLC either individually or with more people, the steps are as follows:
- Choose the structure and the type of Limited (LTD). Directors, shareholders, etc.
- How participations or shares of the company are divided. Who owns what percentage, etc.
- Register the company. Doing this online takes 48h and costs £15.
- Register the address and the company name. It must end in Limited o Ltd.
- Declare the organization chart: directors, secretaries, responsible people, etc.
- Declare the assets of the company: how many shares, the founding capital, shareholders, etc.
- Statement of partnership within the company: sign legal agreements regulating who does what.
- Pay your taxes. Three months after establishing the company, you will have to register with HMRC.
- All the information: https://www.gov.uk/limited-company-formation
If you need help and advice with your project, you can contact the official offices in each country:
- England: National Enterprise Network
- Wales: Business Wales
- Scotland: Business Gateway
- Northern Ireland: NI Business Info
Official links with information about how to start a business:
Search engines for UK Licenses, parties, business activities, etc.:
HMRC’s online course that teaches you how to do the paperwork and documentation necessary for building your business:
Other websites about creating a start-up:
If you still need further information and help on how to start your business project, there are several options:
- All the help you may need to start a new activity, training, project management, ideas, etc.: www.startupdonut.co.uk
- Help with everything related to the marketing and advertising of your company: www.marketingdonut.co.uk
- Resources about understanding and managing your company under the UK laws: www.lawdonut.co.uk
- Everything related to IT and computer resources that you are going to need in your new project: www.itdonut.co.uk
- Non-profit agency for business creation: smallbusinesscentre.org.uk
- Congress – Start-ups Fair in London: www.bstartup.com
- Non-profit organization for promoting and guiding start-ups: enterpriseenfield.org
If you live in Bristol and you are looking for local advice:
- BRAVE is an independent nonprofit organization that helps entrepreneurs: www.brave.org.uk
- OUTSET is a platform that offers courses, training and support for entrepreneurs: www.outsetbristol.co.uk
- Local information from the City COUNCIL: www.bristol.gov.uk/business/starting-new-business
INNOSPACE: business incubator college that offers space and support: www.innospace.co.uk
Information about how to start a business: business.scotland.gov.uk/topic/starting-up-a-business
Everything about starting a business in Wales: business.wales.gov.uk
HMRC video tutorials on how to do the paperwork:
1. Being self-employed and the British tax office, everything you need to know:
2. How to handle your TAX RETURN form online:
3. How to register for VAT:
4. How to send your VAT Return online: