Isle of Man Online > Q & A > How To Go Self Employed

How To Go Self Employed

Bookmark and Share

I thought that it may be of some use to explain about self employment as a sole trader on the Isle of Man first, just in case anybody is considering going solo. I was very lucky to have a close group of well educated and experienced friends who have been down this road before. Without them I wouldn’t of had a clue as to how to go about working for myself. The Isle of Man government does very little to help those who are looking to become self employed as a sole trader, they are fine if you want to form a Limited Company but being a sole trader is a whole different subject. So here is my small guide to starting self employment on the Isle of Man:-

  • Income Tax – You’ll need to notify the tax office of your intention to go self employed. You need to fill in form R133 which annoyingly isn’t available for download from the IOM Government website (Probably the only form not availabl;e online, I told you they’re not very supportive of self employment). The easiest way to get this form is to email incometax@gov.im and ask for a copy, you should also request a copy of their guidance notes for self employed income tax. As well as form R133 you’ll also need to submit both copies of the T21 that your last employer gives you. That’s all there is to it concerning notifying the income tax department.
  • NIC (National Insurance) – It may come as a surprise to learn but the NI contributions office is in a totally different location to the tax office on the Isle of Man. You can find NI contributions (which is part of the DHSS) on the second floor of Markwell House, Market Street. The tax office is part of the treasury in central government offices. You’ll have to apply to pay self employed NI contributions (Class 2) which are currently £2.10 a week. Don’t get too excited though because if you earn over a certain limit you’ll have to pay Class 4 contributions to the income tax office. A Class 4 assessment is done at the same time as you are assessed for income tax when you have submitted your self assessment for the previous financial year. Anyway I digress, you can find a copy of the application to pay self employed NI contributions by following the link. A number of payment options are available but by far the easiest is to setup a direct debit from your business bank account. You can find the form here. Once accepted payments will start to be deducted, that is your National Insurance obligation covered.
  • VAT – Value Added Tax adds a whole new complexity to the accounts of somebody looking to go self employed. VAT accounting is an area that I’d best suggest you employ an accountant for. The good news is that if your turn-over (not profit) is less than the VAT limit (currently £62000) then there is no need to register for VAT. Remember though that if you’re not VAT registered then you can not charge VAT, to do so is an offence. If you’re unsure of how VAT works or if you have any questions then you can contact the VAT office on the Isle of Man at the email address customs@gov.im
  • Banking – I’d strongly suggest that you open up a business current account, it will help to simplify things for your accountant or more importantly for yourself if you are doing your own books. The Isle of Man Bank offer 18 months free business banking for existing customers or 12 months free business banking for new customers. I looked at most of the big banks and settled on the Isle of Man Bank, there charges are very competitive and they offer decent online banking. The only hesitation I would have with using them is that the debit cards they provide are not visa or mastercard based. This can cause problems with some online merchants, I’ve had to resort to using my personal visa debit card from time to time and reimbursing my personal account. The other thing to think about is setting up your bank account early. It can take more than a month to get cards, cheque books and internet access sorted out. This may not seem that long but remember that you need to provide bank details in order to setup your NI direct debit.
  • Trading Name – There is no need to register a trading name in order to go self employed but in my opinion you should. Even if it’s only to help seperate work life from personal life, it costs such a small amount and is such little hassle that it’s well worth doing. The first thing to do is to just have a quick check on the internet and make sure than nobody else is using the name you want (just do a Google search for the trading name you want to use). You’ll then need to fill in form bn1 and send it of to the FSC with your £38 fee. A few weeks later you should recieve your certificate through the post. Something worth remembering is that you are not supposed to apply for a trading name until you have started trading. However you’ll need your trading name when filling in the forms for the Tax Office, NI and optionally your bank.

So thats about it really, register a trading name, open a business bank account and register as self employed with the TAX and NI offices. As far as accounting goes and your books I’d recommend a book and a piece of software. QuickBooks Simple Start is a really easy to understand piece of accounting software. They offer a months free support so it’s a great opportunity to learn the basics of business accounting for a cheap price (around £40). Understanding Business Accounting for Dummies – UK Edition does what it says, an easy to understand guide to business accounting. Although it goes into far more detail than what you may need it also covers the basics really well.

Related Categories:- Q & A
4 Responses to “How To Go Self Employed”

  1. Mr Fake Name says:

    Thanks for publishing this.. but is there a discussion anywhere about the balance of benefits and costs to starting an enterprise on the Isle of Man as a sole trader vs as a limited company?


  2. I doubt there’s much discussion because it depends entirely on your circumstances. Obviously there is a point at which going Limited becomes more tax efficient (certainly on the NI side) but there are always the extra costs/complications associated with forming your own company. Then again there are the advantages of limited liability (depending on the nature of your business) Like I say it’s a very personal decision and not one which most accountants are happy to give an informed opinion on unless you pay them 🙂 The island is jam packed with accountants, so that would be my first port of call.


  3. Absolutely fab piece. Trying to find out what I can legitimately claim as business expenses. Any ideas.

    Also the Government must have read your blog as they have now made the R133 form downloadable.


  4. Legitimate business expenses don’t really alter on how you decide to structure yourself. If it’s 100% related to your business then claim it, on top of that if you’re working from home you should be able to claim a portion of your utility bills (whatever you think is reasonable for your time working, usually around 30%).

    Hope that helps but if you want a more definitive yes/no list then I’d ask any accountant – small island, we all know at least a couple right? 😉

Leave a Reply

Please Complete Captcha Before Submitting *






Things To Do On The IOM