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The calculation of tax due and National Insurance owing is done through self-assessment.

You either need to complete form CWF1 or call the newly self-employed business helpline. This should be done within three months of undertaking your first piece of self-employed work in order to avoid a fine.

 Form CWF1 | www.hmrc.gov.uk/forms/cwf1.pdf

 Helpline for the newly self-employed | 0845 915 4515

It’s not onerous to complete the form and, once registered, you’ll be classified as self-employed and sent a self-assessment tax return each year, which you complete, showing your income and expenses from self-employment as well as details of your employment elsewhere (if applicable).

You will be subject to tax and National Insurance on any profits you make, but the good news is that any losses incurred can be offset against your employed income (if you have any), which could even result in a tax rebate.

Depending on your turnover and how straightforward your tax affairs are, you may be able to complete the Short Tax Return (SA200). However, this cannot be self-selected, nor is it on the HMRC website; HMRC will send it to you automatically if they think you qualify, based on information given in the previous year’s return. If you have turnover below £68,000, it’s likely that you will qualify. As ever, though, it will depend on individual circumstances, and the law (and various criteria it uses) may change!

Self-assessment tax return deadlines are as follows:

 paper tax returns should be received by HMRC by 31 October of tax year ending 5 April.

 online tax returns should be completed by 31 January (giving you an extra three months).