Understanding being self-employed or a sole trader

Some helpful information on being self-employed / a sole-trader

Kate avatar
Written by Kate
Updated over a week ago

To find work through grafter you acknowledge you are self-employed or a sole trader.

Here is some helpful information from Gov.uk to help you understand that.

Working for yourself - being self-employed

Key points:

  • If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed - even if you haven’t yet told HM Revenue and Customs (HMRC).

  • You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.

  • If you’re self-employed, you may need to set up as a sole trader. (see below)

Being a Sole Trader

If you’re a sole trader, you run your own business as an individual and are self-employed. You can keep all your business’s profits after you’ve paid tax on them. You’re personally responsible for any losses your business makes. You must also follow certain rules on running and naming your business.

Your responsibilities

You need to set up as a sole trader if any of the following apply:

  • you earned more than £1,000 from self-employment between 6 April 2019 and 5 April 2020

  • you need to prove you’re self-employed, for example to claim Tax-Free Childcare

  • you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits

How to set up as a sole trader

To set up as a sole trader, you need to tell HMRC that you pay tax through Self Assessment. You’ll need to file a tax return every year.

Working in construction industry

Register with HMRC for the Construction Industry Scheme (CIS) if you’re working in the construction industry as a subcontractor or contractor.

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