How to Register as Self-Employed in the UK

In most cases, you do this by registering for Self Assessment as a sole trader. However, you do not necessarily need to register before you start trading, and whether you need to register at all can depend on how much trading income you receive.

This guide explains when you need to register as self-employed, how the registration process works and what you need to think about once your business is up and running.

What does it mean to be self-employed?

If you run a business for yourself as an individual, rather than through a limited company, you will usually be classed as a sole trader.

Being a sole trader does not mean you have to work alone. You can employ staff and use subcontractors while still operating as a sole trader.

There is also no requirement to form a company before you can start a business. A sole trader and a limited company are different business structures, with different legal, accounting and tax implications.

As a sole trader, you are personally responsible for the business and generally report its income and expenses to HMRC through Self Assessment.

Can I start working before registering as self-employed?

Yes. You do not normally have to wait for HMRC to register you before you can start trading.

You should, however, keep accurate records from the date you start your business. This includes details of your sales and other business income, as well as your business expenses and supporting documents such as invoices and receipts.

You can then use these records to calculate the profit or loss from your business when completing your tax return.

When do I need to register as self-employed?

HMRC says you must register as a sole trader if your gross trading income is more than £1,000 in a tax year, before deducting expenses.

This £1,000 figure is important because it relates to income, not profit.

For example, if you receive £1,500 from self-employed work but incur £900 of expenses, your profit may only be £600. Your gross trading income is still £1,500, so the £1,000 threshold has been exceeded.

There are also circumstances where you may need or want to register even if your income is £1,000 or less. HMRC gives examples including needing to prove that you are self-employed, wanting to make voluntary Class 2 National Insurance contributions, or needing to register as a subcontractor under the Construction Industry Scheme (CIS).

The £1,000 trading allowance also has its own rules and restrictions, so it should not simply be assumed that the first £1,000 of every sole trader’s income is automatically tax-free.

What is the deadline for registering as self-employed?

If you need to complete a tax return and are new to Self Assessment, you normally need to tell HMRC by 5 October following the end of the relevant tax year.

The UK tax year runs from 6 April to the following 5 April.

For example, if you started trading during the 2025/26 tax year, which ended on 5 April 2026, and need to complete a tax return, you should normally notify HMRC by 5 October 2026.

Registering late does not necessarily mean that you will automatically receive a penalty, but HMRC states that a penalty may be charged if you fail to notify them when required. It is therefore best not to leave registration until the tax return deadline.

How do I register as self-employed?

You register as a sole trader by registering for Self Assessment with HMRC.

HMRC now provides an online service which asks questions about your circumstances and directs you through the appropriate registration process.

You will normally need your National Insurance number to register.

If you have previously been registered for Self Assessment, the process may be different. For example, HMRC may require you to reactivate your Self Assessment account.

If you already complete a tax return for another reason, HMRC’s current guidance says you may still need to register as a sole trader so that your self-employment is correctly recorded.

What happens after I register?

Once your registration has been processed, HMRC will use a Unique Taxpayer Reference (UTR) to identify you for Self Assessment.

Your UTR is an important tax reference and should be kept safely. If you appoint an accountant or tax adviser, they will usually need your UTR when arranging authority to deal with HMRC on your behalf.

You will then need to report your self-employed income and allowable business expenses as part of your Self Assessment obligations.

For most people who are not within Making Tax Digital for Income Tax, an online Self Assessment tax return is normally due by 31 January following the end of the tax year.

Your tax is generally due by the same 31 January deadline. Depending on the amount of tax due and how much has already been collected elsewhere, you may also have to make payments on account towards the following year’s bill.

Turnover and profit are not the same thing

Understanding the difference between turnover and profit is particularly important when you become self-employed.

Turnover is broadly the income generated by your business before deducting business expenses.

Profit is broadly what remains after deducting allowable business expenses from your business income.

For example, if your business receives £40,000 during the year and has £12,000 of allowable expenses, its profit would broadly be £28,000.

Income Tax and Class 4 National Insurance are generally based on taxable profits rather than simply the amount paid into your business bank account.

Other rules, such as the VAT registration threshold and Making Tax Digital for Income Tax, use measures based on turnover or qualifying income instead, so the distinction matters.

What records should a sole trader keep?

Good record keeping should start as soon as you begin trading, not when your first tax return becomes due.

HMRC requires self-employed people to keep records including their business sales and income and business expenses. Depending on the business, you may also need VAT records, PAYE records if you employ people, and other supporting information.

You should keep evidence supporting your figures, such as invoices, receipts and bank records.

For Self Assessment, business records generally need to be retained for at least five years after the 31 January submission deadline for the relevant tax year.

Keeping your records organised throughout the year makes preparing your accounts and tax return considerably easier and reduces the risk of missing allowable expenses.

What expenses can I claim?

You do not normally pay Income Tax on your turnover. Instead, allowable business expenses can usually be deducted when calculating your taxable business profit.

Depending on your business, these could include costs such as office expenses, professional fees, insurance, certain travel costs and other expenses incurred for the business.

Not every payment made by a business is automatically tax deductible, and some expenses have special rules.

For a more detailed explanation, see our guide to what business expenses you can claim as a sole trader.

How much tax and National Insurance will I pay?

The amount of Income Tax you pay depends on your taxable income and your individual circumstances, rather than simply whether you have registered as self-employed.

Self-employed people may also pay Class 4 National Insurance.

For the 2026/27 tax year, Class 4 National Insurance is charged at:

• 6% on self-employed profits above £12,570 and up to £50,270; and
• 2% on profits above £50,270.

The treatment of Class 2 National Insurance has changed in recent years. Most self-employed people no longer pay compulsory Class 2 contributions in the way they previously did.

For 2026/27, self-employed people with profits at or above the Small Profits Threshold can receive the relevant National Insurance credit without paying Class 2. Those with profits below the threshold may be able to pay voluntary Class 2 contributions to protect entitlement to benefits such as the State Pension.

Because tax and National Insurance depend on your overall circumstances, it is sensible to put money aside for your eventual tax bill rather than treating all of the money received by the business as available to spend.

Do I need to register for VAT?

Registering as self-employed does not automatically mean you need to register for VAT.

The current compulsory VAT registration threshold is £90,000 of taxable turnover. You generally need to register if your taxable turnover for the previous 12 months goes over £90,000, or if you expect it to exceed £90,000 within the next 30 days.

Businesses below the compulsory threshold can sometimes register voluntarily.

VAT has its own rules, so businesses approaching the threshold should monitor their taxable turnover rather than waiting until the end of their accounting year.

What about Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is now being introduced for sole traders and landlords.

The date from which you are required to use it depends on your qualifying income, which broadly looks at gross income from self-employment and property before expenses.

The current timetable is:

If you fall within Making Tax Digital for Income Tax, you will need to use compatible software to keep digital records and send quarterly updates to HMRC, as well as completing your end-of-year tax obligations.

You can read more in our Making Tax Digital for Income Tax guide.

Are there any other registrations I might need?

Depending on what your business does, registering for Self Assessment may only be one of the administrative steps involved in starting your business.

For example:

Employing staff: If you take on employees, you may need to register as an employer and operate PAYE.

Construction Industry Scheme: Different registration and deduction requirements can apply if you work as a contractor or subcontractor within CIS.

VAT: Registration may be compulsory if your taxable turnover exceeds the VAT registration threshold, although voluntary registration is also possible.

Licences and regulatory requirements: Some trades and professions have their own licensing, insurance or regulatory requirements separate from HMRC.

It is therefore worth considering the business as a whole rather than treating Self Assessment registration as the only requirement.

Do I need a separate business bank account?

A sole trader is not legally separate from their business in the same way that a limited company is.

That means there is not a general tax rule requiring every sole trader to have a separate business bank account, although you should check your bank’s terms regarding the use of personal accounts for business transactions.

In practice, keeping business transactions separate can make bookkeeping much easier and gives you a clearer picture of how the business is performing.

Do I need an accountant when I become self-employed?

There is no requirement to appoint an accountant simply because you become self-employed.

Many straightforward sole traders manage their own registration and records, particularly when the business is small.

An accountant can become useful where you want help understanding what expenses are allowable, keeping appropriate records, preparing accounts and tax returns, planning for tax liabilities, dealing with VAT or CIS, or understanding when Making Tax Digital applies.

Getting the bookkeeping and tax setup right at the beginning can also be easier than trying to correct poor records later.

At Baldwin’s Accountancy Services, we work with sole traders and partnerships across Lancaster, Morecambe, Carnforth and the surrounding area, as well as clients further afield.

If you are starting a business and would like help getting your accounting and tax affairs set up properly, you can make an enquiry and we can discuss what support you need.