Registering as self-employed - advice?

I have been doing a bit of work cash-in-hand for a book conservator friend of mine, and I have known for awhile I really need to register myself as self employed to declare (and pay tax) on my earnings from this job.

It's been over 6 months since I last did work for her, and it was only about five or six occasions which amounted to less than £250. I know I face a penalty if I declare work greater than 3 months ago. She wants me to begin working for her again, probably 4-5 hours a week, so I know I really need to get myself sorted out. Do I go ahead and register now, and declare the previous work and risk a hefty penalty?

Also, DH and I are about to become unwilling landlords for awhile. The flat is in both our names, so does that mean we BOTH have to register self employed and fill out self-assessment forms for the rental income? Or can DH just deal with all the rental income  in his name only, and I can happily stay out of it?

I know this has US tax implications, and I'm going to look into that eventually... but all the landlord red tape/regulations is doing my head in just now, so I'm trying to tackle one thing at a time.

Actually, I might start another landlord thread!

k

Call and ask HMRC...they are actually quite helpful. 

Vicky

A government agency that is actually helpful?? Surely not!

Anyways, I was hoping to avoid asking about the previous income. 'Yeah, I've got this friend who had income from 6 months ago and didn't declare it. Is she going to go to prison? No, it's no one you know...'

Seriously, do that.  I know it sounds unlikely, but they are helpful.  They realise people make mistakes and are much keener on helping those who have screwed up in a minor way than on throwing the book at you.

Vicky

AIUI, you wouldn't normally need to be self-employed to be a landlord - from the SA105 guidance notes (http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf):

Complete the UK property pages if, in the year to 5 April 2008, you received:
• rental income and other receipts from UK land and property
• income from letting furnished holiday accommodation
• premiums arising from leases of UK land
• an inducement to take an interest in any property for letting (a reverse premium).
But use the Self-employment pages for any income from:
• canals, inland navigations and docks
• mines and quarries, including sandpits, gravel pits and brickfields
• rights of markets and fairs, tolls, bridges and ferries
• farming, market gardening or other commercial occupation of land
• hotels and guest houses
• letting furnished accommodation in your home that amounts to a trade, for
example, if you run a guest house or offer bed and breakfast, rather than just
taking in a lodger
• wayleaves if the land to which the wayleave relates is used in your trade.
Use other pages of your Tax Return for any income from:
• wayleaves if the land to which the wayleave relates is used neither in your trade
nor in your rental business (box 15 on page TR 3)
• post-cessation receipts (that is rental income received after the rental business has
ceased, which has not previously been taxed) (box 14 on Additional Information
page Ai 1)
• Real Estate Investment Trust dividends and distributions (box 15 on page TR 3).
If you are not sure whether you should be completing the UK property pages or
the Self-employment pages, please contact us.
If your land or property is abroad, use the Foreign pages, and if you receive property
income as part of your income from a partnership, use the Partnership (full) pages.

You may want to determine whether you would be self-employed or an employee for the book conservation work. Depending on the nature of the contract you have it could be either. Employment is probably easier for you, but requires more work for the employer (unless they already have other staff). The HMRC has a guide on self-employment vs. employment, or you can ask them for an opinion.

(I am not a tax adviser or an accountant. This is not professional advice)

Thanks, both. Vicky, I think I will take your advice, go against all of my base instincts, and actually call the HMRC and ask for help!

cabbage, I have actually seen those notes... but all the advice I've seen on landlord forums has suggested that registering self-employed is necessary. Again, a call to HMRC looks in order.

As far the the conservation work goes, I don't have a contract. I invoice her ever 2nd or 3rd day I've worked, and she sends me a cheque. It's very very casual. I do think she is reporting it, though...so I realize I need to as well.

Will phone on Monday, and see what they say. Thanks!

Curious what your experience was like, Darksquid. I've found HMRC to be extremely helpful (once I can get someone on the phone, that is!). And I get the sense that, unlike the IRS, they aren't out for blood. That they just want things to be by the book and will actually HELP you get there.

DH and I are about to become unwilling landlords for awhile. The flat is in both our names, so does that mean we BOTH have to register self employed and fill out self-assessment forms for the rental income? Or can DH just deal with all the rental income  in his name only, and I can happily stay out of it?

Can you explain more? What is being rented out? Might the rental be covered by "rent-a-room" relief? For more detail ... click here.

If anything is taxable then given that the flat is in joint names, I think the rental should likewise be treated as being in joint names. And that might be good, given the low amount of your self-employment income, assuming you are not also employed, there might be some personal allowances left over to set against your share of the income from property.

Do I go ahead and register now, and declare the previous work and risk a hefty penalty?

How long ago did the self-employment start? And don't assume the penalty will be hefty. It probably will be the standard £100.

Curious what your experience was like, Darksquid. I've found HMRC to be extremely helpful (once I can get someone on the phone, that is!). And I get the sense that, unlike the IRS, they aren't out for blood. That they just want things to be by the book and will actually HELP you get there.

I haven't had a chance to phone yet - I will try to before the end of the week. I have spoken to a couple of friends of mine who have registered self employed, and they say the same as you and Vicky - they are actually quite helpful! Wonders never cease!

Can you explain more? What is being rented out? Might the rental be covered by "rent-a-room" relief? For more detail ... click here.


If anything is taxable then given that the flat is in joint names, I think the rental should likewise be treated as being in joint names. And that might be good, given the low amount of your self-employment income, assuming you are not also employed, there might be some personal allowances left over to set against your share of the income from property.

How long ago did the self-employment start? And don't assume the penalty will be hefty. It probably will be the standard £100.

Hi John. We will be renting the entire flat out (one bedroom), so I don't think we would fall under the rent-a-room scheme, unfortunately.

I am indeed already employed full-time and contribute to PAYE, so my self-employed income and my rental income will be in addition to this.

I worked for this person over a period of a couple months 8 months ago. I didn't realise the penalty was just £100... I had anticipated an IRS-style penalty! I guess that's more than worth paying if it means I will be properly above board from now on.

Thanks.

OK, register the self-employment as soon as possible. Take the hit on the £100 penalty. HMRC will .... given that it seems the self-employment started prior to 6th April, issue a self-assessment tax return for you to complete .. in respect of the tax year to 5th April 2008.

Given the low level of the profit being made you might want to apply for exemption from Class 2 National Insurance Contributions.

The flat rental! OK, rent-a-room relief is not applicable, but the two of you own the flat? Subject to a mortgage? If so the taxable amount, if any, will take into account the mortgage interest being paid while the flat is being let out.

Don't forget you can deduct losses from the property - subject to complex limits -against other income for US tax purposes, so it may be a good thing from a tax perspective...

To darksquid, and anyone else needing to register as self-employed in the UK, I think you will find this HMRC webpage rather helpful.

Thanks, I found that page, and called the helpline this morning. Unfortunately, they were not able to register me over the phone (I didn't pass their security check or something?), so they have posted me a paper form. The woman was indeed very friendly and helpful, and although she advised me I will have to pay the £100 penalty, I'm glad I'm getting this sorted out.

Anyways, I think this will be the year I finally get myself an accountant!

My experience with HMRC has been very good as well.  It's like they went out of their way to be helpful.  Call them again and ask about their classes--seriously.  They give classes on doing your self-assessment and things like that which are very helpful.  The lady that taught my class actually gave us her card so if we had questions when we were doing ours, we could call her personally and get good advice.