UTR stands for Unique Taxpayer Reference. A UTR number is a ten-digit code issued by HMRC which uniquely identifies you, or your company, for tax purposes. HMRC (HM Revenue & Customs) uses this unique identity number to track your tax obligations. Your UTR number remains your unique tax identity usually throughout your life, just like your National Insurance (NI) Number.
Do I Need a UTR Number?
You need a UTR number to pay tax. Your UTR number helps HMRC match records to payments related to your tax and monitor for any suspicious activity. Self-employed workers need a UTR number to complete and file self-assessment tax returns, engage an accountant or to pre-pay your tax in installments. If you are an employee of a company you will pay tax via PAYE (pay as you earn) This is then spread out over the year and is taken in installments, usually out of your wages, so there’s no need for you to calculate your own tax or register to file a tax return. HMRC will still generate a UTR for you, but there is no need for you to know it.
Company Versus Personal UTR
Your personal UTR is automatically generated by HMRC when you register for self-assessment. This identifies you as an individual. This personal UTR number cannot be used as your company UTR. Your self-assessment tax return is the document you need to file with HMRC, so that they can calculate the tax you owe. Your UTR number will arrive by post to your registered personal address. If you incorporate as a company you will be assigned a separate UTR for your company that relates directly to the business, not to you individually.
What Taxes Do I Need to Pay?
Income tax is liable on earnings such as wages and salaries. This applies to the earnings of employees and self-employed, whether that is a sole trader or a partnership. Corporation tax is liable on the profits of a limited company, either private or public. If you are self employed you will pay income tax on all your earnings over the personal allowance along with national insurance contributions. The personal allowance is currently frozen as opposed to rising in line with inflation.
Self Assessment Tax Return
Your tax return reports your income, expenses, and other financial information in three sections – income, deductions and tax credits. Usually tax returns are filed annually by individuals, whether they are a sole trader working individually, or a partnership. Partnerships also file individual self-assessment tax returns as opposed to a corporate tax return. As a self-employed individual you will need to file your self assessment tax return once a year, in the UK the tax year runs between 6th April and 5th April. Following this period you have 10 months to get your records in order and file your self assessment tax return by the 31st January the following year.
Self-employment incurs the risk that your individual financial affairs aren’t separate from your business activities. If a client fails to pay an invoice on time or fails to deliver a milestone, this could impact you personally, because your business finances are not legally separate from your personal finances. Registering a limited company comes with limited liability. A limited company is a separate legal entity. This means your own finances and the company’s finances are separate. We recommend reading our Guide to Self Employment Versus Limited Company here. If you register a company, you do not need to complete an application for the associated UTR. This will be generated automatically when you register with Companies House. Companies House notifies HMRC following registration of your company. You will then receive a letter from HMRC informing you of your new company’s UTR number. The letter will be addressed to your registered office address as opposed to your own personal address, unless these are the same.
How Do I Get a UTR Number?
When you register for self assessment or set up a limited company you will automatically receive your UTR number in the post from HMRC. You can register for self-assessment directly with HMRC. If you are starting self-employment, you should register for self-assessment as soon as possible. However you cannot register if you’re not starting your sole trader business within the next 28 days. You need to have registered for self-assessment by 5th October following the end of the tax year for which you wore tax. For example, if you earned income from self-employment during the tax year 2021/22, you need to register by 5 October 2022. If you become self-employed in the 2022/23 tax year, you should register by 5 October 2023. If you miss the deadline for any reason you could face a penalty. If you are registering a limited company, you need to do this with Companies House. In either case you will automatically receive a UTR number after the process is complete. It is best practice to apply a few months in advance of when you will need it,. to file your first tax return for example. It will take a few weeks for your UTR to arrive. Applying for your UTR number is free and a simple process – provided you have the relevant information ready.
You will Need:
- full name
- current address
- National Insurance Number
- date of birth
- phone number
- email address
- date that your self-employment began
- type of business you’re starting
Limited Companies will also need:
- business address
- business phone number
You will need to provide a description of your business activity even if you are setting up as an individual freelancer and you simply need to pay your tax via self-assessment. There is a bit more paperwork required when registering a limited company with Companies House. Prestige Business Management can help prepare your business for registration.
Where Can I Find My UTR Number?
If you already have a UTR number you can find a record of it in a number of places, you just need to check your paperwork. It’s a ten digit number. It appears on documents from HMRC such as these:
- Past tax returns
- Payment reminders
- Notices to file tax returns
- Statements of account
- “Welcome to self-assessment” letter (SA250)
If you can’t locate any of these contact HMRC to recover your UTR number.
Prestige Business Management Works For You
At Prestige Business Management we can guide you through the self-assessment process and or register a limited company for you, depending on where you are in your business journey. Find out what we can do for you. Call us today on 0203 773 2927.