Working in the UK – getting started

National Insurance number

The starting point for working in the UK is that you will need a National Insurance Number. Most UK citizens will be automatically issued with a National Insurance Number before they start work, but workers from abroad will need to apply for one. The process is outlined on the DirectGov website at obtaining a National Insurance number.

Understanding the UK tax system as it applies to your work

In the UK, workers are either employed or self employed. You will need to be clear about whether your work is employment or self-employment. This is critical for two main reasons:

1. Some people (Romanians and Bulgarians) are only allowed to work in the UK so long as they are self-employed
2. Self-employed people are responsible for registering with HMRC and paying their own taxes, while employees have their taxes collected and paid on their behalf by their employer

Employed workers

Employed workers have tax and National Insurance deducted from their wages before they receive them under the PAYE system.

It is important to recognise that PAYE is only a way of collecting tax; it is not proof that the right amount of tax has been paid. The accuracy of the system depends on the PAYE code used for your employment. If the PAYE code is incorrect you could pay the wrong amount of tax. You may pay too much, or you may pay too little. If you pay too much, you may not get it back unless you act! For more information on being an employee, see the  employee section.

Self-employed workers

Self-employed workers need to register with HMRC. They are responsible for paying their own tax. They need to complete annual self assessment tax returns. You need to save up for your tax bill as there is likely to be a long delay and then a big bill. For more information see the self-employed section. 

If you are self-employed and don’t complete your tax returns, HMRC may send you an estimated tax bill. HMRC can collect this estimated bill through the courts – even though it is inaccurate. This estimated bill is only replaced if you send in a tax return, and you have only 4 years in which to do this. If you return home and then come back to the UK, you could be met with a large estimated bill if you have not sent in all your returns and told HMRC when you leave the UK.  HMRC can also pursue tax debts in your home country.  If you have problems paying your tax, see our tax debt guide.

 Workers in the construction industry

Workers in the construction industry can be employed or self-employed. Employees are taxed through PAYE in the normal way.  However, there is a special scheme for collecting tax from self-employed workers in construction. If you are self-employed you need to register with HMRC as self-employed and as a construction industry subcontractor. As a self employed person you will remain responsible for your tax affairs, but the contractor for whom you work is required to withhold basic rate tax (20%) from all payments they make to you.  Furthermore, they are unable to pay you until you have registered with HMRC and provided them with a tax reference. For information on this, see our CIS Subcontractor section.

Making contact with HMRC

When you arrive to work in the UK, you need to contact HMRC to ensure that your tax position is correct. You may need to contact HMRC to ensure that your tax free personal allowance is correct for PAYE if you are employed, to register as self-employed as discussed above or to obtain ‘split year’ tax treatment (see the next section on residence).