Top 7 HMRC Questions Every Small Business Owner Asks
Running a small business in the UK is exciting—but let’s be honest, HMRC paperwork? Not so much.
If you’re a contractor, creative, a freelancer, or an independent business owner, staying on top of HMRC requirements can feel confusing and time-consuming. From deadlines to VAT, there’s a lot to get your head around. Especially if you are just starting out with your business.
The uncertainty can give you headaches and stress that is not needed. You got enough to deal with building your business.
At Craeftig, we know how important it is to keep your projects, time, and billable expenses organized. While we’re not yet integrated with HMRC systems, Craeftig gives you a clear picture of your job-based costs and helps you understand what you’re invoicing, what you’re spending, and how it all fits together.
Here are the 7 most common HMRC questions small business owners ask—and how Craeftig’s current features can support the way you work.
Do I Need to Register with HMRC?
Short answer: Yes—if you’re earning money, you’ll need to register:
- Sole traders must register for Self Assessment.Â
- Limited companies need to register for Corporation Tax.
- If your income exceeds the VAT threshold (£90,000), you’ll need to register for VAT.
How Craeftig Helps:
While Craeftig doesn’t handle registration, it helps you log jobs and track time and billable expenses—giving you a clearer view of what you’re earning from client work.
Craeftig also ensure all the tax calculations are done for you, so capturing expenses and invoicing your customer all the hard work about VAT is done for you.
When Do I Need to File My Tax Return?
Here are the basics:
- Sole traders must register for Self Assessment.
- Limited companies need to register for Corporation Tax.
- If your income exceeds the VAT threshold (£90,000), you’ll need to register for VAT.
How Craeftig Helps:
By helping you associate costs, time, and materials with each job, Craeftig gives you clarity on income and outgoings—making it easier to prepare when filing season comes around.
What Can I Claim as Business Expenses?
Typical allowable expenses include:
- Office costs ( if you are running a home office you can set this off, reducing your tax liability)
- Travel for work ( company van or car? – totally yes, but keep those private miles logged or use another car)
- Professional services (your end of year accountant or bookkeeper – reduces your tax bill)
- Materials and subcontractor costs (cost you spend on the job or project either for you customer or your company – keep those receipts these are reducing your tax bill)
- ….
How Craeftig Helps:
Craeftig lets you link expenses and team costs directly to client work, helping you build a record of what you’ve spent to deliver each job. This can help you identify what may be deductible when preparing your accounts.
Learn more:
HMRC’s guide to allowable expenses
Do I Need to Register for VAT?
 Only if your taxable turnover is over £90,000 in a 12-month period. Below that, registration is optional—but it may still benefit your business in some cases.
How Craeftig Helps:
While Craeftig doesn’t calculate quarterly VAT return or file returns yet, tracking your job-related income and expenses helps you monitor your revenue and spot when you’re getting close to the threshold.
More on this:
Check out our full VAT guide for small construction businesses in the UK—even if you’re not in construction, the examples can help you understand how VAT works in real-life projects.
What Is Making Tax Digital (MTD)?
Making Tax Digital is HMRC’s move to digital tax reporting. Currently, it’s mandatory for most VAT-registered businesses and will extend to Income Tax and Corporation Tax in the future.Â
So in the future you will only be able to submit your return online.Â
How Craeftig Helps:
Craeftig isn’t MTD-compatible yet, but by helping you keep job-level financial records organized, you’re one step closer to the kind of digital bookkeeping MTD will eventually require.
Explore further:
Making Tax Digital: Overview on GOV.UK
What Happens If I Miss a Deadline or Make a Mistake?
HMRC may issue penalties for:
- Late tax return filings
- Late payments
- Errors in your financial reporting
How Craeftig Helps:
By maintaining visibility over your project costs, materials, and billable hours, Craeftig can reduce guesswork and help you feel more prepared when it’s time to share information with an accountant or advisor.
Read more:
HMRC Enquiries: Complete Guide for Small Businesses – FSB
What Records Do I Need to Keep for HMRC?
You should keep:
- Income and sales records (all your sales invoices your issued to customers)
- Expense and purchase receipts
- Job-related cost breakdowns
- Any proof of payments (so naturally your bank statements are helpful here)
How Craeftig Helps:
Craeftig helps you build job-level records that show time spent, materials used, and team costs—all of which can be linked to client billing. These records contribute to a clearer, more professional overview of your business activity. Craeftig allows you to keep track of your customer payments.
HMRC Recordkeeping Rules:
Check what records to keep – GOV.UK
Final Thoughts
How Craeftig Helps:
You don’t need to have all the answers—but having a clear handle on your work and what it’s costing you is a powerful place to start. This a great head start towards measuring your company and job profitability.
Craeftig is designed for contractors, freelancers, creatives, makers, and small business owners who want a simpler way to track the work they do, the money they spend, and the value they deliver. And while HMRC integration isn’t here yet, the way you structure your jobs and expenses today can lay the foundation for easier compliance tomorrow.
Try Craeftig today—and bring clarity to the way you work.
