When do I need to register my business with HMRC?

In the UK, if you’re earning over £1,000 through self-employment or wish to register an incorporated company, you must inform Companies House and/or HMRC. Whether you're operating as a sole trader, setting up a partnership, or incorporating a limited company, registration is essential to ensure you're paying the correct taxes and fulfilling legal obligations.

What does it mean to register a business in the UK?

Registering a business in the UK means informing Companies House and/or HMRC that you’re operating a business for tax purposes. This can take different forms depending on your business type. For example, a sole trader only needs to register with HMRC for tax self-assessment, while a limited company must be incorporated with Companies House and registered with HMRC for Corporation Tax.

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It’s important to note that registering a business is not the same as incorporating a company. Incorporation refers specifically to forming a limited company, which has separate legal status from its owners. By contrast, sole traders and partnerships register with HMRC to declare their income and pay taxes, but they are not separate legal entities from the individuals who own them.

Different company types explained

There are several ways to structure your business in the UK, each with its own registration requirements:

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• Sole Trader: This is the simplest structure where you are personally responsible for your business’s debts. You must register with HMRC for self-assessment if your earnings exceed £1,000 per year.
  
  
• Limited Company: A limited company is a legal entity separate from its owners. You need to incorporate with Companies House as soon as you begin trading and register for Corporation Tax with HMRC within three months. Directors are required to submit annual accounts and a confirmation statement. If you started as a sole trader, you could later incorporate a limited company using the same business name, but this process will require re-registering with Companies House and HMRC.
  
  
• Partnership: In a partnership, two or more people share responsibility for the business. Each partner must register for self-assessment, and the partnership itself must also be registered with HMRC.
  
  
• Limited Liability Partnership (LLP): LLPs provide the benefits of limited liability for partners while still allowing flexibility in how profits are shared. An LLP must be registered with Companies House and HMRC.
  
  
• Other business structures: In addition to these common structures, businesses like Community Interest Companies (CICs) and Public Limited Companies (PLCs) have specific registration requirements that vary depending on their activities.

Is there a legal requirement to register your business?

Yes, if you're earning over £1,000 annually from self-employment, you must register with HMRC. The £1,000 trading allowance applies to sole traders, and once you exceed this limit, registration becomes mandatory.

For limited companies, registration with Companies House is required before you can start trading. You’ll also need to register with HMRC for Corporation Tax within three months of starting business activity.

If your turnover exceeds £90,000 in a 12-month period, you must also register for VAT, regardless of your business structure.

Penalties for not registering

Failing to register your business with HMRC when required can lead to significant penalties, including fines and backdated tax payments. For example, if you miss the deadline to submit your tax return as a sole trader, you’ll be fined £100 if it’s up to 3 months late and more for filings made later than this. It’s essential to ensure that you’re fully compliant from the start to avoid being fined.

What are your commitments after registering?

Your obligations vary depending on your business structure. Below is a breakdown of common commitments for each type:

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• Sole traders: You’ll need to submit an annual self-assessment tax return and pay Income Tax and National Insurance based on your profits.
  
  
• Limited companies: You’ll be required to file annual accounts with Companies House, submit a confirmation statement, and file Corporation Tax returns with HMRC. Directors must also submit a personal tax return for any earnings outside the company.
  
  
• Partnerships: Each partner must file a self-assessment tax return, and the partnership itself must submit a partnership return to HMRC.
  
  
• LLPs: Similar to limited companies, LLPs must file annual accounts with Companies House and submit a confirmation statement, alongside registering for Corporation Tax.
  
  

If your business hires employees, regardless of structure, you’ll need to register for PAYE (Pay As You Earn) with HMRC.

How to register a business in the UK

The process of registering a business depends on the type of business you’re operating. Below is a breakdown of the most common structures:

Sole traders

Where to register: Register directly with HMRC through the Government Gateway for self-assessment.

What you’ll need: National Insurance number, personal details, and business information.

Limited companies

Where to register: Incorporate with Companies House and register for Corporation Tax with HMRC.

What you’ll need: 

• Addresses: Registered office address, director's service address, business trading address.
• Directors: Details of each director, such as their town of birth, mother or father’s maiden name, telephone number, National Insurance number and passport number.
• Articles of Association: The document outlining how the company will run (you can use the standardised articles of association during registration if required).
• Share allocation and value: Details on the shareholding structure.

Partnerships

Where to register: Register the partnership with HMRC and ensure each partner is registered for self-assessment.

What you’ll need: Business and partner details, profit-sharing agreement.

LLPs

Where to register: Incorporate with Companies House and register for Corporation Tax with HMRC.

What you’ll need:

• Addresses: Registered office and members' service address.
• Members' details: At least two designated members' details, such as their town of birth, mother or father’s maiden name, telephone number, National Insurance number and passport number.
• LLP Agreement: Details on how the partnership will operate, including profit distribution and management structure.

How much does it cost to register a business in the UK?

The costs associated with registering your business depend on the business type:

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• Sole Traders: There’s no fee to register as a sole trader.
  
  
• Limited Companies: The cost of incorporating a limited company is £50 when registering online or £71 when registering by post with Companies House.
  
  
• Partnerships: There’s no cost to register a partnership.
  
  
• LLPs: It costs £50 to register digitally using third-party software, with a same-day service available for £78, or £71 to register by post.

Do you need a designated address for your registered business?

For incorporated companies and LLCs, you’ll need the following addresses:

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• Correspondence address: To receive correspondence relating to your company.
• Business trading address - For non-official correspondence, or to include on marketing materials and stationery.
• Registered office address - The public address listed on Companies House.
• Directors’ service address - The address where a director can be officially contacted.

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For sole traders, you’ll only need to provide a correspondence address which HMRC will use to contact you. However, for all company types, you should consider that you may need to provide your address to customers, clients and suppliers.

What are your options for a business address?

You have several options when choosing which address to use for your company, such as:

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• Your home: If you use your home, you must consider that there may be instances where you provide your personal address to the public, such as your customers. It may also be more difficult to manage business correspondence when mixed with personal mail. If you are a limited company or LLC, then your address will also be publicly listed on Companies House.
• A PO Box: For sole traders and partnerships who only need an address for correspondence, a PO Box offers a cost-effective solution that allows them to separate their personal and business correspondence. However, you cannot use a PO Box as a registered office address.
• A virtual business address: A virtual business address is the most complete solution, offering privacy and convenience while being a suitable address to use for incorporated companies. You’ll also have more choices over the location of your address compared to other options.

Managing your company mail

After registering your business, it’s essential that you stay on top of important correspondence. HMRC and Companies House may periodically contact you to remind you of your duties, such as tax filings, and you may also receive postal correspondence from customers, clients and suppliers that require your attention.

Our combined solution of a virtual address and online mail platform makes this simple to handle. Just sign up for a virtual address and you’ll automatically get access to features such as:

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1. Mail scanning - We’ll automatically scan any envelopes and take a photo of your parcels when they arrive. View these scans in your account, as well as requesting that we open and scan your letters so you have full visibility of your correspondence.
2. Mail forwarding - If you need any of the mail sent to your virtual address forwarded elsewhere, we can post it to any other address worldwide.
3. Mail storage - We offer 30 days free storage of your physical items along with unlimited digital storage of your scans.
4. Send letters online - Send letters by uploading a PDF and providing the delivery information. We’ll prepare your letters and post them on your behalf.
5. Organise mail - Use tags and folders to organise your digital scans and make it easier to manage and reference files.
6. Integrations and automations - Integrate your account with other platforms such as Google Drive, OneDrive, Evernote, Dropbox, Zapier and Make to create time-saving automations.