Why you need a UTR

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Why you need a UTR

It’s that time of year when people who are already self-employed are breathing a sigh of relief after filling in their returns, but it’s also the time when a lot of employed people starting thinking about starting their own business too.

There are so many things on the list of things you need to do when you start out in business, but getting your UTR is perhaps the most important as it allows HMRC to track what tax you owe, or indeed process your refund.

So what is a UTR?


This stands for Unique Tax Reference, and it’s the number that HMRC will use to make processing your tax return much more efficient. Most people just call it their UTR. This is usually a 10 digit number and is unique to you. A bit like your national insurance number (hands up who can remember their NI number?)

If you set up as a limited company, then you’ll also get a UTR, this is a company UTR. This is used for things such as tax returns, corporation tax and business taxes. There are other scenarios where you may need to register for self-assessment, such as having an income of over £100,000 or if you are part of the Construction Industry Scheme (CIS)

When you register for self-assessment tax, then you’ll automatically get this number issued to you.


Is there a time limit on doing this?


Yes, there is. HMRC like you do yo this as soon as possible! They expect this to be done within the first three months of you becoming self-employed. So it’s much easier to do this as part of your business setup whilst you remember! It’s easy to apply for one.

You can register online, fill in a form, or call HMRC, so there is no excuse. If you’re deemed to be self-employed but haven’t notified HMRC, then you could also get a hefty fine and could even face prosecution!


What information do I need?


You’ll need to have a few bits of information to hand. Your full name, address, NI number, date of birth and phone number. You’ll also need to let them know when you started your business (so the date you became self-employed), the nature of your business, the business address and also phone number. The business address may be the same as your home address, or it could be a different address where your business is registered.

When you start to fill in your tax return, you’ll also need to know the accounting dates for your company. So don’t forget these…


What if I’ve lost my number?  


You need this number to submit your tax return, so please, if you find that you’ve lost it, get in touch with HMRC as soon as you can. You could end up being fined for incorrectly filling in a tax return!

Whilst we’re on the topic of fines, it’s worth remembering that the fine for late tax returns starts at £100 for being a day late, and increases by £10 per day (up to three months late) on top of the initial £100! In the worst of cases, you could be fined 100% of your tax due, which effectively doubles your tax bill.


Is there anything else I should know?


Applying for a UTR is relatively easy, you can do it here on the government’s tax website.  


If you wanted to work with an accountant, then they will also need to be aware of your UTR. Once you have applied for a UTR, HMRC will send you an activation code. This can take up two weeks to arrive (10 working days) so don’t panic if you don’t get it right away!

If there are any other questions, then please feel free to get in touch, we’d be happy to help.

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