Becoming a freelancer or self-employed is an exciting step, but it comes with the responsibility of handling your taxes effectively. To get started, you’ll need to create a personal tax account with HMRC, the UK’s tax, payments, and customs authority.
The great news is that your personal tax account serves as a secure online platform, making it much easier to interact with HMRC and submit your tax returns.
Even better, setting up a personal tax account with HMRC is completely free and takes only about ten minutes. In this article, we’ll walk you through the process step by step and provide you with ten simple steps to create your personal tax account.
Now, let’s start with the basics: Why should you set up a personal tax account?
Benefits of Setting Up a Personal Tax Account:
Creating your personal tax account with HMRC offers several advantages. Firstly, it simplifies tax management because you can handle everything online in one place.
Your personal tax account provides quick access to tools that help you track your income, monitor expenses, and stay on top of important tax deadlines throughout the year. It also streamlines the process of submitting tax returns, ensuring compliance with HMRC regulations.
With your personal tax account, you can easily check your income tax payments for the past five years, manage tax credits, update personal information, and retrieve your National Insurance number or UTR (Unique Taxpayer Reference) with just a few clicks.
Furthermore, having a personal tax account means you’ll receive important updates from HMRC directly and should be able to resolve tax issues without the need for written correspondence or phone calls.
How to Set Up Your Personal Tax Account with HMRC:
1. Gather Your Documents:
Ensure you have your National Insurance number, passport, or a recent P60 on hand.
2. Visit HMRC’s Website:
Go to the personal tax account page on HMRC’s official website and click the “Start now” button.
3. Create Your Government Gateway Account:
Sign in using your Government Gateway user ID and password. If you don’t have one, click “Create sign-in details” for new users.
4. Verify Your Email Address:
Enter your email address, receive and enter the verification code, then click “Continue.”
5. Provide Your Name and Password:
Input your full name and set a strong password (minimum 10 characters).
6. Obtain Your Government Gateway ID:
You’ll receive a 12-digit Government Gateway user ID, distinct from your UTR (Unique Taxpayer Reference).
7. Choose Account Type:
Select the type of personal tax account you need: Individual, Organisation, or Tax Agent. Choose “Individual” if it’s for personal use.
8. Set Up Security and Verification:
Establish additional security measures, including providing your phone number and selecting how you want to receive access codes.
9. Verify Your Identity:
Furnish personal identification information such as your National Insurance number, birthdate, and income and employment details as prompted on the screen.
10. Start Using Your Personal Tax Account:
Congratulations! Your personal tax account is now set up.
What’s next? You can log in at any time to manage your taxes, update personal information, and submit tax returns via HMRC’s portal. Remember to keep your details current on HMRC’s site and submit your annual tax returns through your personal tax account.
For more information on managing your personal tax account, refer to education on submitting your Self Assessment tax return and understanding tax obligations if you’re freelancing on the side. Good luck!