Never registered as self employed. How to deal with tax?

greenblack

Hello,

From 2017 April to 2018 September I worked in a company independently: no benefits, just weekly pay for completed tasks straight into my bank account. I would submit a simple excel table style invoice at the end of the week.

At first, I didn't make much, I still lived off my savings, but then I ended up earning regularly, which was enough to live frugally and save as much as possible.

I never registered as self-employed and didn't even think that I need, should or that's the type of work I am doing. Only a year later this thought stumbled upon me when a friend started talking about her "self-employment".

So now I have 14k of savings, which are decreasing because I am living off savings again and currently applying to a regular type of jobs, meaning, not going to be a self-employed, at least for a while, probably never in the UK - I don't have plans to settle down but I am open to this or any other idea. Just no definite long term plans besides a long time travel in the next 1-4 years.

I know, the deadline for tax returns has already passed. I didn't think it will be a big deal, because I didn't plan to return to the UK after I left my previous job and also I didn't make that much money - I just saved as much as possible, while still enjoying my life. I am not sure how much I have earned in total. Let's say 14000 in 2017 and 20000 in 2018.

But now I'd like to invest this money and as I was reading the forms I noticed, they will be checking my history for money laundering reasons. I don't have any paperwork. And I don't know where to go from here. I had a few ideas.


Option 1 (not honest): just spend this money and invest income from my future employment. But ... can I use the same bank account (I was thinking to upgrade my account and start with ISA)? Can I open a new bank account in a different bank and start from scratch or will they check my whole history anyway?

Option 2: deal with HMRC and come clean. Would I need to register as self-employed when I no longer am? If not, then how do I file a tax return?

It just seems a bit insane to me, that I worked my butt off to save a little, give myself some breathing and travel time and now I'll have to leave half that for taxes... ;/ I am already late for tax, so I'd rather wait for much longer, sort out my work and savings/investment situation, get some income and only then deal with taxes.

Potbellypig

greenblack wrote: »

It just seems a bit insane to me, that I worked my butt off to save a little, give myself some breathing and travel time and now I'll have to leave half that for taxes... ;/

Yea, it's a crazy world we live in.

Pennywise

You need to register as self employed - you just tell them the date you started, i.e. 2017, and then you need to complete self assessment tax returns and pay the tax you owe. Then you can tell them the date you stopped self employment.

01afraser4

As Pennywise has said, you need to register and file a tax return to declare your self employed earnings.

Burying your head in the sand is a bad idea and if HMRC identify that you should have registered before you actually do, then the consequences will likely be a lot worse.

londoninvestor

greenblack wrote: »

now I'll have to leave half that for taxes... ;/ I am already late for tax, so I'd rather wait for much longer, sort out my work and savings/investment situation, get some income and only then deal with taxes.

The taxes should be nothing like half what you've earned.

Try with a calculator like this:
https://www.employedandselfemployed.co.uk/self-employed-tax-calculator

If you earned £14k in one tax year and £20k in the next (not exact, because I think you were referring to calendar years), you probably have about £4k to pay.

Dazed_and_confused

I know, the deadline for tax returns has already passed

There can be no penalties for late filing of a return if you haven't been asked to complete one. You will get 3 months to complete the return once HMRC issue it.

You will be charged interest for late payment of any tax which is due though although HMRC interest rate is relatively low.

dont_use_vistaprint

Dazed_and_confused wrote: »

There can be no penalties for late filing of a return if you haven't been asked to complete one. You will get 3 months to complete the return once HMRC issue it.

You will be charged interest for late payment of any tax which is due though although HMRC interest rate is relatively low.

Partly true, they will give 3 months if they believe you tried to determine yourself if you need to file and found you diddnt , it depends on how you answer the questions from small biz compliance. One of the questions is what did you do to determine if you need to file. Its not simply that you were not asked, you have a responsibility to tell them when things change

TheCyclingProgrammer

Dazed_and_confused wrote: »

There can be no penalties for late filing of a return if you haven't been asked to complete one. You will get 3 months to complete the return once HMRC issue it.

Whilst this is true, HMRC *could* levy a failure to notify penalty for the 2017/18 tax year, as OP should have notified by 6 October 2018. This would be a percentage of the "potential lost revenue".

For a relatively recent failure to notify that is fully disclosed followed up by prompt completion of the missing tax return and payment of tax this could be reduced to almost nothing. How they determine the penalty is outlined here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/677811/CC-FS11__01_18.pdf

Of course for OP, the income earned from April 2018 - Sep 2018 are for the current tax year and therefore is not overdue for reporting.

Cook_County

On what basis was this engagement self-employment? Why did the engager of the work not withhold PAYE?

John_G_Jones

greenblack wrote: »

It just seems a bit insane to me, that I worked my butt off to save a little, give myself some breathing and travel time and now I'll have to leave half that for taxes... ;/ I am already late for tax, so I'd rather wait for much longer, sort out my work and savings/investment situation, get some income and only then deal with taxes.

Poor trolling, 1/10, must try harder.