Starting your own business or becoming a sole trader can be both exciting and overwhelming. There are a number of tricky decisions to make, from choosing the right business structure, to coming up with a catchy business name, and finding the best business bank account for your needs.
Fortunately, setting up your unique taxpayer reference number isn’t one of them. Although you have three months from when you begin trading, to register with HMRC as self-employed, ideally it’s something you’d do right away, as you’ll need it in any dealings with HMRC. Additionally, some banks will check that you are registered with HMRC before approving your bank account. Tide is one such bank that is known to do this.
Strangely the UTR isn’t something that is mentioned much when discussing starting a business, or side hustle, but it’s an important step to getting you up and running that shouldn’t be overlooked.
What is a UTR number and do I need one?
A unique tax reference number or UTR number for short, is a 10-digit code that is assigned to you by HM Revenue and Customs (HMRC). As its name suggests, it is a unique identifier used to track your tax affairs and is required when filing a tax return, making a payment, or communicating with HMRC about your tax affairs.
Typically, you will only need a UTR number if you have to file a self-assessment tax return. As such, it’s usually used by those who’ve either set up a limited company, or are self-employed.
That being said, there are instances where those employed, and paying tax through PAYE may have to file a self-assessment return. For example, when declaring earnings from abroad, or having to declare capital gains.
How to get a unique taxpayer reference number (UTR)
Now that we’ve covered how important it is, how do you get a UTR number?
To obtain a UTR number, you need to register for self-assessment with HMRC. You will need to register if you are self-employed, a company director, a freelancer, or earn income from renting out property or investments. This is a straightforward process that can be done online on the HMRC website or by calling their helpline on 0300 200 3300.
During the registration process, you will be asked to provide some personal information, such as your name, address, and date of birth, as well as details about your income and employment status.
Once you have registered, HMRC will assign you a UTR number, which you will need to use when filing your tax returns and communicating with HMRC about your tax affairs.
You’ll receive a letter with your UTR number via post. This can take up to 10 days at the best of the times, even longer if Royal Mail is suffering strikes, or random malware attacks again, so it’s a good idea to apply for your number as soon as you begin trading, if not before.
It’s important to keep your UTR number safe, as you will need it when filing your tax returns and communicating with HMRC about your tax affairs. If you lose your UTR number, you can request a replacement by contacting HMRC’s helpline.
What’s the difference between a UTR and a National Insurance number?
UTR numbers are not the same as National Insurance numbers: While both UTR numbers and National Insurance (NI) numbers are used for tax purposes, they serve different functions.
National Insurance numbers are used to track your National Insurance contributions and eligibility for state benefits, while UTR numbers are used solely to track your tax affairs.
For those from certain EU countries, this might be something of strange concept. In Spain for example, your DNI/TIE is used for both tax and access to state benefits. In the UK the system isn’t as joined up. As such you have different numbers for tax, national insurance, and healthcare.
Do I already have a UTR number?
There are some circumstances in which you may already have a UTR number, such as if you have previously registered for self-assessment or if you have received income from an overseas source. In this case, you can find your UTR number on previous tax documents or by contacting HMRC’s helpline.
Overall, obtaining a UTR number is an important step in managing your tax affairs in the UK. By registering for self-assessment and obtaining a UTR number, you can ensure that you are meeting your tax obligations and avoid penalties for non-compliance.
UTR – what you should know
- UTR numbers are specific to the UK tax system: UTR numbers are only used in the UK tax system and are not relevant for tax purposes in other countries.
- You may need to provide additional information when registering for self-assessment: Depending on your circumstances, such as details about your business activities or income from overseas.
- Your UTR number will not change unless you request it: Once you have been assigned a UTR number, it will remain the same unless you request a change. This means that you can use the same UTR number for multiple years when filing your tax returns.
- You must keep your UTR number safe: Your UTR number is a sensitive piece of information that should be kept confidential. You should store it in a secure location and avoid sharing it with anyone who does not have a legitimate reason to know it. There have been instances of scammers fraudulently using other people’s UTR numbers.
Unique Taxpayer Reference number FAQs
Who needs a UTR number?
Anyone who is self-employed, a company director, a freelancer, or earns income from renting out property or investments will need to register for self-assessment and obtain a UTR number.
How long does it take to receive a UTR number?
It can take up to 10 working days to receive your UTR number after registering for self-assessment.
What do I do if I have lost my UTR number?
You can request a replacement UTR number by contacting HMRC’s helpline.
Can I use someone else’s UTR number?
No, you cannot use someone else’s UTR number. Each individual or business entity must have their own unique UTR number.
Do I need to provide any documentation to register for self-assessment?
You may need to provide documentation such as proof of identity, proof of address, and proof of income.
What happens if I don’t have a UTR number?
You will not be able to file a tax return or communicate with HMRC about your tax affairs without a UTR number. As filing a return is compulsory for those who are self employed, you will also be fined, and there’s the possibility of HMRC opening an investigation into your tax affairs.
Can I apply for a UTR number if I am not a UK resident?
Yes, you can apply for a UTR number even if you are not a UK resident, as long as you have UK tax obligations, which could be because you have setup a company in the UK as a non-resident, or are currently trading here.