Register As Self Employed?

dllive

I have a full time job. For the past 6 months or so I have been doing odd bits of freelance work in the evening and weekends. In my naievity I thought I would just need to fill in a self assessment form at the end of the tax year and enter my 'additional' earnings. But it looks like I need to actually register myself as being self employed, and I should have done this within 3 months of doing some freelance work. Is this true? What are the implications of me not having done it within the first 3 months of doing freelance work? Just to reiterate: I do have a full time job. I want to get the accounts/tax side of my freelance work sorted out for peace of mind. Thanks.

PlutoinCapricorn

A lot depends on whether the freelance work is a major source of income.

Do you do it for individuals or organisations?

Some people who, for example, clean their neighbour's windows from time to time in return for 'pocket money' should declare this income but are not expected to register as sole traders as they are not really in business. It is a personal arrangement and they are not expected to invoice their 'customers'. HMRC do not want huge numbers of such people registering.

You may find however that responsible organisations will not want to retain you if you are not registered as a sole trader. You will not be able to take advantage of offsetting expenses agaianst income if you do not register.

People who decide to take the sole trader route are now expected to register within one month of their first assignment. The penalty may be £100 if you have not got a good reason for the delay.

fengirl_2

Whilst I agree with Pluto that you do not need to register as self employed if you are not really running a business, he is incorrect on the subject of expenses.
You need to keep accurate records of all your income and expenditure so that you can make an accurate return at the end of the year. You will have expenses and you need to show these on your return. If you are just earning freelance fees, then I would suggest that you are not in business and a return at the end of the year is enough.
Registering as a sole trader does not mean you are self employed at every job you do. This relies on the relationship between you and the 'employer' and its up to them to decide whether they are your employer or whether you are offering your services to them.

dllive

Thanks for your reply.
My freelance work is not my major source of income. The work I do is for companies. I only expected to do 1, maybe 2 jobs, but it's picked up a bit and I don't want to turn work away. Maybe in a year or two Ill be able to give up the day job and work freelance fulltime.
I don't have many expenses I can claim against - maybe a bit of petrol, although I do want to buy a new laptop at some point.
All this is new to me and I don't want to 'get away' with not paying tax. In fact the opposite, I want to get all this completely legit. But I pressume the tax man will want to penalise me £100 anyway.

dllive

Thanks Fengirl. I think I need to actually speak to the tax office. There seems to be some kind of 'subjectivity' involved as to whether I am actually self employed or a freelancer. My plan is to build up a freelance client base, and once that reaches a 'critical mass', then I can leave my day job.
I do keep a record of my expenses and invoices. Its very simple for me to do (given the amount of invoices Ive issued).

PlutoinCapricorn

If you are hoping to build up a business so as to give yourself something to fall back on and your clients are companies, then registering as a sole trader does seem the way to go.

Getting advice from HMRC is a good idea, and you could also look at www.businesslink.gov.uk.

If you did not expect more than 1 or 2 jobs, then perhaps this is a good reason for the delay in registering. You may avoid the penalty if so..

dllive

Thankyou for your comments.