06/07/2022Tax News and Tips
Every taxpayer should have a Unique Tax Reference (UTR), especially when they are self-employed and have launched a limited company. So, it is essential to know what a UTR number is and how to apply for this number and why it is important for you.
Unique Tax Reference (UTR) is essential to pay your taxes and track your tax returns over the years. Otherwise, many complexities would have arisen if many people have had similar tax numbers. Therefore, HMRC assigns every person a unique 10-digit number to distinguish the taxpayers and maintain their records accurately.
Let’s discuss what a UTR is and why it is essential to get one from HMRC. Moreover, we will explain the procedure of how to achieve a Unique Tax Reference (UTR) number and how long it takes to get the number in the process. So, let’s start our discussion!
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What is a Unique Tax Reference (UTR)?
Unique Tax Reference (UTR) is a number assigned to a taxpayer who is eligible for self-assessment tax returns. This eligibility becomes active when someone is self-employed or has initiated a limited company.
HMRC uses this unique group of 10 digits to maintain a record of the returns of each taxpayer. Moreover, the taxpayers use this number to pay for their returns. The tax reference number ends with the letter K in most cases.
Unique Tax Reference is used for the whole life of a taxpayer. However, if you lose your UTR, you don’t need to panic, you can simply contact HMRC and they will provide you with the UTR.
Why UTR is Essential and Who Needs to get it?
If you are a self-employed person, you have to manage and pay your taxes yourself. Similarly, a person who is the owner of a limited company or has a partnership in a limited company needs a tax reference number for the self-assessment tax return. The registration for self-assessment tax returns is possible only when you apply to the HMRC. They will assign you a number of 10 digits you will use to pay your tax returns.
UTR is important as it helps HMRC maintain a proper record of your taxes paid or due and track the progress on your taxes. Similarly, the UTR helps the taxpayer in maintaining and tracking a record of their taxes. If you need Construction Industry Scheme (CIS) tax refund registration, UTR will help you get it. Similarly, working with consultants and tax advisors also requires a unique tax number. You can avoid hefty fines and penalties if you enter your correct UTR while paying your Self-assessment returns.
On the same lines, a company needs a UTR number. It helps HMRC maintains a proper record of the taxes of a company. It is also a 10-digit number used for business tax, corporation tax and tax returns. Similarly, if you have not registered your limited company with HMRC, you will pay a heavy fee in penalty if HMRC comes to know about your business later and the absence of a unique tax number.
How to Get a Unique Tax Reference (UTR) Number in the UK?
A self-employed, owner or a partner in a limited company can get the Unique Tax Reference number from the HMRC either by writing a letter and ultimately posting or by applying online. So, it is essential to know about both procedures.
A self-employed person is supposed to inform HMRC about their employment status or the company within ninety days of the start of business. Otherwise, HMRC will put a penalty fee for the self-employed or a limited company.
First of all, if you launch your limited company and register it for self-assessment tax returns with HMRC, you will become eligible for UTR automatically. You don’t need to apply separately for this number.
Secondly, you can write a letter in the name of HMRC, mention your self-employment, print out the letter and post it to the address of HMRC.
Upon completing the process, you will get an activation code within 10 business days of the registration.
After this, you can apply online to open an online tax account using the activation days. After 28 days, the activation code expires and you can use it no longer. So, you have to apply again for another activation code.
What Documents are Required for UTR Registration?
Following is the list of documents for completing the UTR registration process. Date of Birth
- Residential Address
- National Insurance Number
- Telephone Number
- Email Address
- The Date Self-Employment or Limited Company Started
- Business Address
- Business Telephone Number
- Type of Business
What if You Have Your UTR Number?
If you have lost your UTR number, you can find it on the following documents:
- Previous Tax Returns
- Notices From HMRC To File A Return
- Payment Reminders from HMRC
Otherwise, you have to call at Self-assessment helpline if you fail to find your UTR number and the HMRC documents. In the case of a public limited company, you can apply online for the Corporation UTR number and HMRC will send the UTR to the address registered with the Companies House.
To conclude, we can say that UTR is important for self-assessment tax returns. It will help you keep track of your tax returns. You can check the record of your taxes on your tax account at HMRC. A self-employed or the owner of a limited company needs this UTR number for managing their self-assessment tax returns.
Disclaimer: All the information provided in this article on What is a UTR Number, including all the text and graphics, is general in nature. It does not intend to disregard any of the professional advice.