Going self-employed in the UK

Plenty of Nepalis in the UK end up working for themselves - in construction and trades, driving, cleaning, catering, beauty, or freelance IT and design. Being self-employed is straightforward once set up, but the tax side is entirely your responsibility, and the penalties for missing it are automatic.

First: check your visa allows it

This is the step that matters most and is most often skipped. Not every visa permits self-employment. A Skilled Worker visa ties you to a sponsor and generally does not allow you to trade on your own account; Student visas prohibit self-employment and business activity. Working outside your conditions puts your status and any future settlement application at risk. Check the conditions attached to your own permission before you register anything - your UKVI account shows them.

Registering with HMRC

If you are allowed to, register as self-employed with HMRC as soon as you start trading. Register at gov.uk – set up as self-employed. HMRC then issues you a UTR (Unique Taxpayer Reference) - a 10-digit number that identifies you for tax. It arrives by post and can take a couple of weeks, so do not leave it until a contractor is asking for it.

You will also need a National Insurance number - see our guide on getting an NI number.

Self Assessment and the dates that matter

Self-employed people report income through a Self Assessment tax return. The UK tax year runs from 6 April to 5 April. For a given tax year, the usual deadlines are:

• 5 October after the tax year ends - deadline to register if you have not already.
• 31 October - paper return deadline.
• 31 January - online return deadline, and the date any tax owed must be paid.

Penalties for a late return start automatically and build up, even if you owe no tax. Confirm current deadlines and penalty amounts at gov.uk – Self Assessment tax returns.

CIS: if you work in construction

The Construction Industry Scheme (CIS) applies to most construction work, and a great many Nepali workers meet it through a contractor rather than by choice. Under CIS, the contractor deducts money from your payments and sends it to HMRC as an advance payment towards your tax and National Insurance.

• Register for CIS as a subcontractor - registered subcontractors have deductions taken at the standard rate, while unregistered ones are deducted at a higher rate.
• Your contractor must give you monthly CIS statements showing what was deducted. Keep every one of them.
• Those deductions are payments on account, not a final tax bill. If too much was taken across the year, you claim it back through your tax return - many subcontractors are due a refund.

Details at gov.uk – Construction Industry Scheme.

Keeping records

You do not need accounting software to start, but you do need discipline:

• A separate bank account for the business makes everything easier, even if it is just a second personal account.
• Keep every invoice you issue and every receipt for costs you claim.
• Set aside a portion of every payment for tax as it comes in - a January bill is far less painful when the money is already put by.
• Keep records for at least the period HMRC requires; check the current rule when you register.

Watch out for

Two recurring problems. First, refund agents who take a large percentage of a CIS rebate for work you could do yourself - and who sometimes file inflated expense claims in your name, which leaves you liable. Second, being told you are “self-employed” when in practice you work fixed hours under someone else’s control with no ability to send a substitute. That can be false self-employment, and it strips you of holiday pay, sick pay and minimum-wage protection. gov.uk – employment status explains the difference, and Acas gives free advice.