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By miguel-ingles
- In Uncategorized
The UTR number is an essential requisite for setting up a company and for doing its tax returns in the British country. For that reason, in this article I will explain how to get a UTR number as a sole trader in the UK.
What is a UTR Number?
In the UK, the UTR (Unique Taxpayer Reference) is a 10-digit code that, sometimes, has a final K. His Majesty’s Revenue and Customs (HMRC) issues it, and it identifies a person or a business. Everyone that files self-assessment tax returns will need a UTR number. That includes sole traders, the owners of a registered company and the members of a partnership.
What Uses Has a UTR Number?
The main purpose of the UTR number is to complete annual self-assessment tax returns. Without it, an application will be incomplete. This can lead to fines for a sole trader or company. It is also used for paying other taxes.
On other part, you will need it if you have to sign up for the Construction Industry Scheme. With this plan, a contractor deduces money from a subcontractor’s pays and transfer them to HMRC. These deductions will count as advance payments towards the subcontractor’s tax returns and National Insurance.
At last, it is also mandatory to have a UTR number to complete the establishing process of a company or if you hire a worker to manage the business’ finances.
Differences between Getting UTR Number and Tax Code as a Sole Trader in the UK
People usually confuse both terms or think that UTR number and tax code actually refer to the same concept. In reality, they are different things that are used in diverse contexts.
On the one hand, as I previously explained, UTR numbers identify a person or business for the self-assessment tax return filing process. Therefore, if you have never worked as a sole trader nor have ever managed a company, it is possible that you do not have one of these numbers.
On the other hand, tax codes are alphanumeric strings that indicate the HMRC which Income Tax or National Insurance rates a person should pay. You will find these rates in the next article. In addition, they will also determine which tax deductions authorities apply to a citizen or if there are specific conditions that affect their fiscal situation.
Steps to Get a UTR as a Sole Trader in the UK
HMRC stipulates that every company must apply for getting a UTR number before three months after its constitution. Moreover, all sole traders must register into HMRC for filing a self-assessment tax return if they have earned more than 1000 GBP before tax reliefs. In case you have not registered before, these are the steps you should follow.
- Access your business tax account, in HMRC. Then, register for both a self-assessment and the Class 2 National Insurance.
- Provide the following information: your name, birthdate, personal and business address, phone number, nature of the business and date that the activity of the business began.
- You will receive the UTR number 15 days after you sent the application. The periods may vary depending on the season of the year or if you live abroad.
I must mention that the request process is completely free. In addition, you can also send the application by phone or mail. This last option is inadvisable due to the extension of the periods. To do it by phone, you must call the HMRC’s self-assessment helpline. Its number is 0300 200 3310.
If you had already submitted self-assessment returns, you could check your UTR number in the HMRC app. Another option would be to look at previous documents the organization had sent you. If you still cannot find it, contact HMRC. You can consult the contact data in this webpage.
In ukstartcompany, you will find information about how to establish, register and operate companies with different legal structures and business activities in the UK.