Thinking about working for yourself? Becoming self-employed in the UK is simpler than many people expect. This guide explains how to become self-employed, register as a sole trader with HMRC and stay on top of tax.
This is general information, not financial advice. Tax rules change — always check the latest guidance on GOV.UK or speak to an accountant.
Do you need to register?
You usually need to register as self-employed if you earn more than £1,000 from self-employment in a tax year (6 April to 5 April). The first £1,000 is covered by the trading allowance, so a small side income below that doesn't usually need to be declared.
You'll also need to register if you want to pay voluntary National Insurance to protect your State Pension record, or if you need to prove you're self-employed (for example, for Tax-Free Childcare).
Sole trader or limited company?
| Sole trader | Limited company | |
|---|---|---|
| Set-up | Register with HMRC online, free | Register with Companies House, small fee |
| Liability | You're personally liable for debts | The company is a separate legal entity |
| Paperwork | Simpler; one Self Assessment return | Company accounts, corporation tax, more admin |
| Best for | Most people starting out | Higher earners or riskier businesses |
Most people start as a sole trader and switch to a limited company later if it makes sense.
How to register as self-employed
- Create a Government Gateway account on GOV.UK if you don't already have one.
- Register for Self Assessment as a sole trader. You'll need your National Insurance number, contact details and the date you started trading.
- Get your UTR number. HMRC will post your Unique Taxpayer Reference, usually within a couple of weeks.
- Set up your Self Assessment online account so you can file returns.
Deadline: register by 5 October after the end of the tax year in which you started. For example, if you started in June 2026 (tax year 2026/27), register by 5 October 2027.
Tax and National Insurance basics
- Income tax is paid on your profits (income minus allowable expenses) above your Personal Allowance, which is £12,570 for most people.
- Class 4 National Insurance is paid on profits above the same threshold — currently 6% on profits between £12,570 and £50,270, and 2% above that.
- Class 2 National Insurance is no longer compulsory for most self-employed people, but you may be able to pay it voluntarily to protect your State Pension record.
Rates and thresholds are reviewed every year, so check GOV.UK for the current figures.
Key Self Assessment deadlines
| Deadline | What's due |
|---|---|
| 5 October | Register for Self Assessment (if new) |
| 31 October | Paper tax return |
| 31 January | Online tax return and payment of tax owed |
| 31 July | Second payment on account (if applicable) |
Late filing triggers an automatic £100 penalty, even if you owe no tax.
Making Tax Digital
HMRC is phasing in Making Tax Digital for Income Tax, which means keeping digital records and sending quarterly updates using compatible software. It applies from April 2026 to sole traders and landlords with qualifying income over £50,000, and from April 2027 to those over £30,000, with lower thresholds planned later.
Keep good records
Keep records of all income and expenses — invoices, receipts and bank statements — for at least five years after the 31 January submission deadline of the relevant tax year. A separate bank account for your business makes this much easier.
Common allowable expenses include office supplies, equipment, travel for work (not your commute), phone and internet use for business, and professional fees.
Next steps
- Open a separate business bank account.
- Choose simple accounting software or a spreadsheet for your records.
- Set aside money for tax — many people save 20–30% of each payment.
- Consider business insurance, such as public liability or professional indemnity.
Thinking of starting small? Read our guide to freelancing for beginners, or browse all our money guides.
