Do you need to register as a sole trader?
You need to register if your income from self-employment is more than £1,000 in a tax year. That £1,000 is the trading allowance, and it is measured on gross income, before you take off any expenses. A tax year runs from 6 April to 5 April.
GOV.UK says you must register for Self Assessment when you earn more than £1,000 in a tax year. You can start trading before you register. Registering is about telling HMRC, not asking for permission to trade.
Some examples:
- You sell £800 of handmade goods online in a tax year. You are under the allowance, so you do not need to register for this income alone.
- You invoice £4,000 of freelance design work and spend £3,200 on software and equipment. Your gross income is over £1,000, so you must register, even though your profit is only £800.
- You work full time on a salary and earn £2,500 from weekend photography. The salary stays on PAYE, but the photography income is over £1,000, so you register for Self Assessment for that income.
There are other reasons you may need to file a tax return, such as untaxed rental income, capital gains or foreign income. HMRC lists them on its who must send a tax return page.
Living outside the UK? Non-residents with UK income may also need to file. Whether UK tax applies to your self-employed income depends on your tax residence and the work you do, so get advice from a qualified tax adviser before you decide.
The registration deadline: 5 October
You must tell HMRC by 5 October after the end of the tax year in which you started. For the 2025/26 tax year, HMRC says you must register by 5 October 2026. If you tell HMRC later, you could get a penalty.
| You started trading in | Register by | Online tax return due | Tax due |
|---|---|---|---|
| 2025/26 (6 April 2025 to 5 April 2026) | 5 October 2026 | 31 January 2027 | 31 January 2027 |
| 2026/27 (6 April 2026 to 5 April 2027) | 5 October 2027 | 31 January 2028 | 31 January 2028 |
The filing and payment dates come from HMRC's Self Assessment deadlines page. A paper return is due earlier, by 31 October. Our Self Assessment deadlines guide covers every date in the year, and the compliance deadline calendar can list them for you.
What you need before you register
The one thing HMRC says you must have is a National Insurance number: you need a National Insurance number to register for Self Assessment. It also helps to have these ready before you start the online form:
- your full name, date of birth, home address, phone number and email
- a Government Gateway or GOV.UK One Login account, or the details to create one
- the date you started self-employment
- a short description of the work you do
- your business name and business address, if they differ from your own name and home address
How to register as a sole trader, step by step
- Check you need to register. Add up your gross self-employed income for the tax year. If it is over £1,000, or you have another reason to file, you need to register.
- Choose your business name. You can trade under your own name or a trading name (see the naming rules below).
- Register for Self Assessment as self-employed. Use HMRC's online registration service. There is no government fee. HMRC then works out the Income Tax and National Insurance on your profits from your returns.
- Wait for your UTR. HMRC posts your Unique Taxpayer Reference. Keep it safe, because you need it for every return.
- Start your records. Record every sale and expense from day one. It makes the first return far easier.
- File and pay by 31 January. Send your return online and pay what you owe for the tax year.
When your UTR arrives
HMRC says you will usually get your UTR by post around 15 days after you register, and that it takes longer if you live overseas. The UTR is a 10-digit number. If it has not arrived, or you have lost it, our UTR number guide explains how to find it.
National Insurance for sole traders in 2026/27
Sole traders pay Class 4 National Insurance on profits, and most no longer need to pay Class 2. HMRC works out both through your Self Assessment return, so there is no separate bill to set up.
| Class | 2026/27 rule |
|---|---|
| Class 2 | Profits of £7,105 or more: contributions are treated as paid, so you pay nothing. Profits under £7,105: you can choose to pay voluntary Class 2 at £3.65 a week. |
| Class 4 | 6% on profits from £12,570 to £50,270, and 2% on profits above £50,270. |
Source: HMRC's self-employed National Insurance rates. HMRC says Class 2 is treated as paid "to protect your National Insurance record". If your profits are below £7,105, voluntary Class 2 can protect your record. Whether it is worth paying depends on your full record, so check it before you decide.
Income Tax is charged on the same profits. For 2026/27 the personal allowance is £12,570, and in England and Northern Ireland the basic rate is 20% on the first £37,700 of taxable income, with 40% and 45% above that. Scotland sets its own bands.
After your first year, HMRC may ask for payments on account: two advance payments, each half of the previous year's bill, due on 31 January and 31 July. They do not apply if your last bill was under £1,000 or more than 80% of your tax was collected at source. New sole traders are often surprised by this, so set money aside from the start.
Records you must keep
You must keep records of your business income and expenses for your tax return. HMRC's list of records to keep includes:
- all sales and income
- all business expenses
- VAT records, if you are VAT registered
- PAYE records, if you employ people
- records of your personal income
- proof such as receipts for goods and stock, bank statements, and sales invoices
Keep them for at least 5 years after the 31 January submission deadline of the relevant tax year. HMRC's example: if you sent your 2022/23 return online by 31 January 2024, keep the records until at least the end of January 2029.
Use a separate bank account and a simple spreadsheet or bookkeeping app from day one. If your income grows past the Making Tax Digital threshold, you will need digital records anyway.
Business name rules for sole traders
You can trade under your own name or choose a trading name. Sole traders do not register their name with Companies House. GOV.UK says a sole trader's business name must not:
- include "limited", "Ltd", "limited liability partnership", "LLP", "public limited company" or "plc"
- be offensive
- be too similar to another business's trade mark
Names that use sensitive or restricted words need permission first. You must also show your own name and your business name, if you have one, on official paperwork such as invoices and letters. Search the trade marks register before you print anything: if a trade mark owner complains, you may have to change the name.
VAT and other registrations
Registering for Self Assessment does not register you for VAT. You must register for VAT if your taxable turnover goes over the £90,000 registration threshold in any rolling 12 months. Our VAT registration threshold guide explains the rolling test, and we offer VAT registration if you need it. Some trades also need a licence or permit from the local council or a regulator, so check what applies to your work.
Making Tax Digital for Income Tax
Once your self-employment and property income passes a set level, you must keep digital records and send quarterly updates to HMRC. The thresholds are over £50,000 from 6 April 2026, over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028, based on your gross income in an earlier tax year. Our Making Tax Digital for Income Tax guide explains who is in scope and what to send.
When a limited company might suit you better
Being a sole trader is the simplest way to start, but you have unlimited liability: GOV.UK says you are personally responsible for all of the debts of the business. A private limited company separates the business from you, pays Corporation Tax on its profits, and lets you take money out as salary or dividends. In exchange it has more admin: annual accounts, a CT600, a confirmation statement and director identity verification.
A company can suit you if you want limited liability, your profits are rising, or clients prefer to contract with a company. We compare the two in detail in sole trader vs limited company. If you decide to incorporate, our guide on how to register a company in the UK covers the steps, and the US LLC or UK Ltd quiz helps founders abroad choose a structure.
Doing it yourself vs using Borderless Filings
You can register yourself on GOV.UK for free, and many people do. The online form takes a short while if you have your National Insurance number and details ready. The harder part is the first tax return: working out allowable expenses, payments on account and National Insurance correctly.
Our Self Assessment service covers the registration and your tax return. Our filing partner prepares the return from the records you upload through our secure portal, checks it with you, submits it, and you can track progress in your portal with reminders before each deadline. We explain the rules and file your return; if your case needs tax advice (for example on residence or overseas income), we will tell you and suggest you speak to a qualified adviser.
Sources
- GOV.UK: Set up as a sole trader
- GOV.UK: Become a sole trader: register as a sole trader
- GOV.UK: Become a sole trader: choose your business name
- business.gov.uk: How to name a new business
- GOV.UK: Tax-free allowances on property and trading income
- GOV.UK: Who must send a tax return
- GOV.UK: Register for Self Assessment
- GOV.UK: Register for Self Assessment if you're self-employed
- GOV.UK: Self Assessment tax returns: deadlines
- GOV.UK: Find your UTR number
- GOV.UK: Self-employed National Insurance rates
- GOV.UK: Rates and thresholds for employers 2026 to 2027
- GOV.UK: Payments on account
- GOV.UK: Business records if you're self-employed: what records to keep
- GOV.UK: How long to keep your records
- GOV.UK: Increasing the VAT registration threshold
- GOV.UK: Choose a legal structure for your business
Fees, deadlines and rules on this page were last checked on 27 September 2026.