So, you’ve moved to the UK. Whooo! All the best for this new beginning – we’re excited to have you here!
It goes without saying that things are a little different than back in Aotearoa. While the tax systems in New Zealand and the UK are quite similar (due to the commonwealth), there are a few key differences that you’ll need to be across. There’s also some paperwork you’ll need to sort before you can get your business up and running.
Welcome to Hnry’s guide to setting up in the UK!
Note: If you’re planning on using Hnry while over here, you’ll need a few bits and bobs in place before you can sign up for our UK service. We’ll cover all this in just a sec.
Setting up as a sole trader
Let’s talk business requirements.
In order to get up and running from a tax perspective, there are three things you’ll need:
- a National Insurance number (NINo)
- a Unique Taxpayer Reference (UTR)
- a UK bank account
Technically, you can start trading without these things – but it could be useful to have them from the getgo, instead of having to scramble down the line.
📖 If you’re at sea with HMRC (the UK version of the IRD), we cover all the basics in our UK Tax 101 article.
National Insurance number
So it isn’t exactly a one-to-one comparison, but for simplicity’s sake, you can think of National Insurance as the UK’s answer to our ACC.
(Technically, the ACC is our answer to National Insurance, in that National Insurance came first. But hey, who’s keeping track?)
Just like you pay ACC levies in Aotearoa, you’ll need to pay National Insurance Contributions (NICs) as a sole trader. In order to pay your NICs, you’ll need a National Insurance number.
To apply for an NINo, you’ll need to:
- be living in the UK (you can’t apply from overseas), and
- have a right to work in the UK (eg. have a visa), or are currently working, looking for work, or have an offer to start work.
You’ll also need:
- your passport
- any other relevant documents (eg. your visa)
- a device to take photos to use as part of your application (eg. mobile phone, digital camera)
From there, it’s pretty straightforward – you can fill in the application form online, and if approved, you’ll receive your NINo in the mail within four weeks. Easy!
Unique Taxpayer Reference (UTR)
To get a UTR, you’ll need to register for Self Assessment.
Self Assessment is basically the UK’s version of a tax return (think NZ’s IR3). The UK is similar to NZ in that employees generally don’t have to file their own tax returns as it’s all done automatically through the PAYE employee system.
Registering essentially tells HMRC that you’re a sole trader, and that you’ll be organising your own taxes come tax time. They’ll then give you a UTR, which you’ll need to complete and file your Self Assessment at the end of the financial year.
1. Create a Government Gateway user ID
To register for Self Assessment, you’ll first need to create a Government Gateway user ID (we know it’s a bit strange to register for something in order to register for something, but it’s how the system is set up).
The good news is that it’s quick, and all you need is an email address and a password.
2. Sign in to your business tax account
Once you have your account details, you’ll need to log in to your business tax account. From there, click the link that says “Add a tax to your account to get online access to a tax, duty or scheme”, if it doesn’t pop up for you automatically.
💡It may prompt you to enable further security for your account. It’s a good idea to set this up, in order to keep your information safe.
3. Fill in the form to register for Self Assessment, and Class 2 National Insurance
Follow the prompts to fill in the Self Assessment registration form. Easy! Heads up, you’ll need your NINo on hand for this.
If you’re not sure how to answer the question on UK residence, check out this guide on the gov.uk website.
📖 You can find more information on the trading allowance exemption in our Tax 101 guide.
Sorted? Sorted.
UK bank account
It stands to reason that if you’re going to trade in the UK, you’ll want a UK bank account for your clients to pay into. No one wants slow international transfers and conversion fees!
Opening a bank account in the UK can be quick and easy, depending on your needs and the bank you ultimately choose. We recommend doing your research, and taking into account all the various rates, costs, and perks (yes, perks!) on offer.
To open a bank account, you’ll generally need:
- Identification documents, like your passport
- A UK phone number
- A UK address.
💡Most major banks may require proof of a UK address. You may need something official like a utility bill, or government letter, in order to satisfy this requirement.
… and that’s it! You’re all set up and ready to trade!
Signing up for Hnry
Now all your other bits and pieces are in order, it’s time to sign up for a Hnry Account.
Just like in Aotearoa and Australia, we’re here to sort all your taxes, so you can focus on building your business. It’s extra special being able to support Kiwi and Aussie sole traders as they take on the UK!
To get your brand shiny new UK Hnry Account, you’ll need:
1. Your National Insurance Number and UTR
Hnry needs both in order to sort your taxes with HMRC. You’ll need to have both on hand before you can sign up for the service.
2. A phone number
You’ll need a mobile number in order to sign up.
3. UK bank account
Hnry UK can only pay into a UK bank account. Good thing you set one up in the last section!
Plus, having a UK bank account will help with verifying your UK address (which you’ll need to do in just a sec).
4. UK proof of address
We need to know that you actually, you know, live in the UK.
Proof of address includes the following documents:
- a bank credit card or current account statement (dated within the last 3 months)
- a letter or bill from a utility company (dated within the last 3 months)
- a council tax bill (dated within the last 12 months)
- a mortgage statement (dated within the last 12 months)
- note: this can’t be an online statement
5. Identification
In order to verify your identity, Hnry will need either a UK driver’s licence, or a passport (it can be international, but it needs to be currently valid).
Once we’ve verified all the above, you’re good to go!
💡Tax in the UK is levied at different rates to Aotearoa. To see how it all works, we’ll send you £1 free once you pass all our checks. We’ll deduct all the tax bits and pieces, just like we would with your pay – the rest is yours to spend!
Other things to remember
Tax in the UK
If you’re curious about sole trader taxes in the UK, we’ve put together a Tax 101 guide that covers the basics.
You can find it in our resources section on the Hnry UK website (along with other useful articles – check it out!).
NZ tax returns
If you’re moving to the UK long term, it’s very likely you will become a non-resident for NZ tax purposes.
What this means is that in general, the only income you’ll need to declare to the IRD is income earned in Aotearoa. This could be rental income from a property in NZ, interest on an NZ bank account, or dividends from NZ companies.
You’ll need to file the relevant tax return through MyIR come tax time.
NZ Student loans
… sorry to bring it up, but if you have a New Zealand student loan, at some point you’ll need to think about managing it as an overseas-based borrower. Hnry UK won’t be able to sort this for you, as it’s out of our jurisdiction.
How interest is charged
Interest is charged at an annual flat rate of 4.9%, but is calculated and added daily. This means that if you knock down your balance steadily throughout the year, the daily interest charged will drop accordingly.
The interest you gain won’t become part of your loan balance until the 31st of March each year. What this means is that your interest will not accrue its own interest – so long as you pay it off in time!
For the first six months, this interest won’t be added to your overall balance. But as soon as you pass the six month threshold, interest will be calculated and added starting the day after you left New Zealand.
Minimum repayments
Overseas-based borrowers have two deadlines each year: 30th September and 31st of March. The amount you owe will depend on the amount left on your loan:
| Loan balance | Amount due 30th September | Amount due 31st March | Total amount due annually |
|---|---|---|---|
| Less than $1,000 | Half your total loan balance | The remaining half of your total loan balance | Total loan balance |
| $1,000 - $15,000 | $500 | $500 | $1,000 |
| $15,000 - $30,000 | $1,000 | $1,000 | $2,000 |
| $30,000 - $45,000 | $1,500 | $1,500 | $3,000 |
| $45,000 - $60,000 | $2,000 | $2,000 | $4,000 |
| Over $60,000 | $2,500 | $2,500 | $5,000 |
The good news is that unless your loan is over $142,860, your minimum repayments will cover any interest charged. The bad news is that the more you owe, the more interest you’ll accrue, meaning your minimum repayments are less likely to knock down the capital (sorry team).
📖 For more information, check out our NZ guide to student loan repayments.
Hnry has your back
Just like in New Zealand, Hnry has your back in the UK.
We’re invested in seeing you and your business thrive, which is why we’ve expanded our award-winning service to this new, exciting location. They may do things differently over here, but what we offer is exactly the same:
- All taxes deducted and paid as you go
- Unlimited quotes and invoices
- Expenses raised and reviewed within the Hnry app
- Access to the Hnry Business Mastercard
- … and all the rest.
We take care of it all, so you’re freed up to focus on what’s important – like your job.
(Also, having time to be a tourist, if that’s your jam. Thoroughly recommend.)
Join Hnry in the UK, and never think about tax again (again)!
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