Northern Ireland self employed – things you should know

As a sole trader your profits are taxed as any other income by the HMRC and as you are self-employed your tax will be self-assessed.

You will need to register with HMRC as self employed and complete an annual self assessment tax return. This return must be filed by 31st October (if filing by paper) or 31st January if filing online.

The amount you owe is calculated after business expenses and personal allowances have been deducted. You will need to pay tax annually by January 31 for the tax year to the previous April. You might also have to make payments in advance for the following tax year. These payments on account are paid in two instalments and will total the previous year’s tax liability.

There are penalties and interest charges for late filing and late payment of tax.

You will also have to pay Class 2 and Class 4 National Insurance Contributions (NICs). Class 2 NICs are charged at a small weekly rate of £2.70. You don’t have to pay if your profits are £5,725 for the tax year in question.

The level of Class 4 contributions you pay depends on your profits. If you generate profits of less than £7,755 you will not need to pay Class 4 NICs. For profits of between £7,755 and £41,450 you will need to pay NICs of 9% of that amount. For profits of more than £41,450 you will need to pay NICs of 9% for the amount between £7,755 and £41,450, plus an extra 2% for anything over the upper figure.

Some individuals, if their income is above a certain level, (currently £81,000 per annum) must apply for value added tax (VAT) registration. This means you will be collecting VAT from your customers and paying it to HMRC less the VAT you have paid out in the course of business.

Wilson Nesbitt Solicitors based in Belfast, Northern Ireland can assist you with any tax compliance issues and help if you have been selected for a tax investigation. If you need to talk with one of our tax advisors please contact us by calling 0800 840 9288.