We caught up with our partner Drivertax in the UK to find out all you need to know about being self-employed.
- What is self-employment? This may seem like an easy one, but it’s important that you have a proper understanding. Being self-employed is working for yourself. When you become self-employed you are classed as a sole trader. This means you are running your own business and can choose when, where and how you want to work.
- What do you do when you first become self-employed? When you become self-employed you have three months to register with HMRC from the day you earn your first money. Registering with HMRC is easy! Drivertax do this for you by getting you to sign a document called CWF1 form. Any accountant can do this for you, it really is quite simple. Once you are registered with HMRC it is all about making sure you are keeping the correct information.
- What is the correct information? HMRC say that as a sole trader you must keep “books and records”. This can often be a hassle; however we’ve all got to do a tax return and at Drivertax they've made the whole process really simple for you. They provide you with the information and a helping hand to keep your books in order. When they get down to it, all they require is everything you earn and everything you spend.
- What is national insurance? National Insurance is a tax system paid by workers in order to fund state benefits. When you become self-employed your National Insurance contributions are made through your tax return. As a sole trader, part of your tax return is taken as your National Insurance. This payment eventually secures your state pension when you reach the state pension age (differs with age and gender).
- How much is national insurance? As a self-employed sole trader, the National Insurance Contributions you have to make are Class 2, which is £148.20 and Class 4, which is 9% of profits over £8,424.
- If I’m not registered can the HMRC find me? Yes, HMRC can find you! Once HMRC finds you, they look at whether your behaviour has been negligent or malicious! If HMRC consider you malicious, then this becomes a legal matter; if they decide negligent then HMRC will require a back duty for previous years. Don’t worry, Drivertax are experts at dealing with this and ensure you are compliant. They will always fight your corner.
- How do I register or who can register for me? To register with HMRC you are required to fill in a CWF1 form. Drivertax can do this for you.
- What is the cost? Drivertax charge a set fee of £360 including VAT for a sole trader tax return but with Fare Pilot you can get a £30 discount off your first year.
- What can I claim for? – When you become a self-employed sole trader, you need to start keeping receipts for the items you buy and the items you pay for. You are obligated to keep your receipts for six years. As a driver there are many things you can claim for. Items include: Fuel, motor expenses, mobile phone, car washing and many more! To find out more about what you can claim for, speak to Drivertax.
- When is my tax return due? – Your self-assessment tax return is not due until 31st January. This means that you have from 5th April until 31st January the following year to submit your tax return to HMRC and pay your tax bill.
Find out more by tapping the Offers tab on your FarePilot app and selecting Driver Tax.