How to Register as a Sole Trader When You Start Working for Yourself

You can start trading before you register

You do not have to form a company before working for yourself as a sole trader. GOV.UK confirms that you can start trading straight away, but registration becomes mandatory when the Self Assessment rules require it.

The main threshold is based on gross trading income, not profit. If you earn more than £1,000 from one or more trades during a tax year running from 6 April to 5 April, you must normally register for Self Assessment as a sole trader.

If your trading income is £1,000 or less

The trading allowance provides up to £1,000 of tax-free trading income each tax year. If your total annual gross trading income is £1,000 or less, you may not need to tell HMRC.

There are exceptions. You may still need or choose to register if you want to claim a trading loss, prove that you are self-employed, pay voluntary Class 2 National Insurance contributions, claim certain benefits based on self-employment, or meet another Self Assessment requirement. The trading allowance also cannot be used against certain income, including some income received from a company, partnership or employer connected with you.

Tell HMRC by 5 October when registration is required

If you need to complete a Self Assessment return for the previous tax year and you have not sent one before, you must tell HMRC by 5 October following the end of that tax year.

For the tax year from 6 April 2025 to 5 April 2026, the relevant notification deadline is 5 October 2026. HMRC states that registering late or failing to register when required can lead to a penalty.

If you start trading during the 2026 to 2027 tax year and your circumstances require Self Assessment, the corresponding notification deadline falls after that tax year ends.

Register through Self Assessment, not Companies House

A sole trader registers with HM Revenue and Customs through Self Assessment. This is different from creating a limited company, which involves Companies House.

Before registering, you need a National Insurance number. HMRC's online registration checker directs you to the appropriate registration route according to whether you are new to Self Assessment or have previously registered.

If you were already registered for Self Assessment for another reason, GOV.UK says you may need to register again specifically as a sole trader so your self-employment and National Insurance position is recorded correctly.

HMRC gives you a Unique Taxpayer Reference

After you register for Self Assessment, HMRC gives you a 10-digit Unique Taxpayer Reference, or UTR. GOV.UK says a UTR usually arrives by post around 15 days after registration, with longer delivery times for people living overseas.

An individual or sole trader may also be able to find the UTR in their Personal Tax Account or the HMRC app once it is available.

Choose a permitted sole trader business name

You can trade under your own name or choose another business name. A sole trader business name must not include terms such as Limited, Ltd, LLP, public limited company or plc, must not be offensive and must not be too similar to another business's protected trade mark.

You must include your own name and your business name, if you use one, on official business paperwork such as invoices and letters.

Keep income and expense records as soon as you begin trading

When you start trading, you must keep records that allow you to work out your profit or loss and complete your tax return correctly. These include records of all sales and business income, business expenses and relevant personal income.

Useful evidence includes invoices, receipts, bank statements, sales records and other documents showing business transactions. VAT and PAYE records are additionally required where those systems apply.

HMRC generally requires self-employed records to be kept for at least 5 years after the 31 January submission deadline for the relevant tax year.

Tax is based on your taxable business profits

Registering as a sole trader does not itself create a fixed registration tax. Your Income Tax and National Insurance position depends on your profits and other income.

For the 2026 to 2027 tax year, self-employed people with profits above £12,570 pay Class 4 National Insurance at 6% on profits above £12,570 up to £50,270 and 2% on profits above £50,270.

If profits are at least £7,105 for 2026 to 2027, Class 2 contributions are treated as paid for National Insurance purposes without a Class 2 charge. If profits are below £7,105, you can choose to pay voluntary Class 2 contributions at £3.65 a week where appropriate.

Registering is only the first tax step

Once Self Assessment applies, you must also send the required return. For the 2025 to 2026 tax year, the standard online filing deadline is 11:59pm on 31 January 2027, and tax due for that year must normally also be paid by 31 January 2027.

For a detailed filing process, see how to file your Self Assessment tax return online with HMRC.

Check VAT separately from sole trader registration

Self Assessment registration and VAT registration are separate obligations. In 2026, you must normally register for VAT if your taxable turnover for the previous 12 months goes over £90,000, or if you expect taxable turnover to exceed £90,000 in the next 30 days.

VAT registration can also be voluntary below the threshold. If you reach the VAT registration conditions, follow the separate process for registering your business for VAT with HMRC.

Check whether Making Tax Digital for Income Tax applies

Making Tax Digital for Income Tax began applying mandatorily to some sole traders from 6 April 2026. It is not triggered simply because you start a new sole trade during 2026.

For 2026 to 2027, it applies to individuals already registered for Self Assessment whose qualifying self-employment and property income was more than £50,000 in the 2024 to 2025 tax year, subject to exemptions and other conditions. The threshold falls to more than £30,000 based on 2025 to 2026 qualifying income for mandatory use from 6 April 2027, and to more than £20,000 based on 2026 to 2027 income for use from 6 April 2028.

People who must use the system need compatible software to keep digital records, send quarterly updates and submit their tax return. HMRC does not provide the accounting software itself.

A sole trader is personally responsible for the business

Being a sole trader is not the same as incorporating a limited company. As a sole trader, you run the business as an individual and are personally responsible for its debts. There is no Companies House incorporation step merely to become a sole trader.

You can employ staff as a sole trader, but PAYE and employer responsibilities may then apply separately.

Avoid these sole trader registration problems

• Do not wait for a company registration certificate: sole traders register for Self Assessment with HMRC rather than incorporating at Companies House.
• Do not use profit to test the £1,000 registration rule; the principal test is gross trading income before expenses.
• Do not assume income of £1,000 or less always means no registration is needed; specific exceptions and voluntary-registration reasons exist.
• Start keeping business records when you begin trading rather than waiting until your first tax return is due.
• If you have previously used Self Assessment, check whether HMRC requires you to reactivate the account or register again as a sole trader.
• Do not confuse Self Assessment registration with VAT registration.
• Check Making Tax Digital separately if your qualifying income meets the relevant threshold.