When Do we Need To Tell The Tax Man About Our business?

Many of us will have started out on a part time basis, whilst still holding down a full time job, until we are ready to ‘take the plunge’ into a full time business.

Often this will either be in the same line of work as our main employment, or it could be the development of a personal hobby or interest.

If it’s just a little income on the side, when do we have to register as a ‘proper’ business, with the Inland Revenue etc? Currently, there is no requirement to register as self employed, provided our total gross income for the tax year doesn’t exceed £1,000. This allows those of us with a small ‘side hustle’ to continue to earn very small sums of money, without the requirement to notify HMRC.

A few years ago, we were able to notify the Inland Revenue at the end of the first year’s trading, on submission of the first year’s accounts and tax returns. This is no longer the case, and once our income hits £1,000 for the first time, we must ensure we are registered as self employed by the 5th October, following the end of that tax year. So, if our total income for the year surpasses £1,000 in November 2025, we would be required to register by 5 October 2026.

There are two main ways to register. You can do so via the HMRC Government Gateway, or by calling them direct, on 0300 200 300.

In order to register, you will need certain information, including personal details, such as name, address, date of birth, contact details and National Insurance number. If you are doing this online, you will first need to register with the HMRC Government Gateway, and to confirm your identity.

Once registered, you will now be classified as self employed, and given a 10 digit UTR, or Unique Taxpayer Reference, which you will need to use in any dealings with HMRC. Initially, you will be registered under Self Assessment, and will complete an annual Self Assessment Tax Return. As turnover increases, you may, potentially need to register for Making Tax Digital for Income Tax & Self Assessment. For more information on MTDITSA, see our recent article HERE.

Whatever the size and structure of your business, it is always prudent to start as you mean to go on, and to appoint an accountant from the outset. Any good accountant will add value to your business, by helping you to plan strategically as to the optimum growth path for your fledgling business.

Of course, not everyone will decide to begin their business journey on a self employed basis. For those of us choosing the limited company option, once we register with Companies House, they should automatically notify HMRC of the details of your new business, and HMRC should then write to you, as applicable.