Before your first sale
Register with HMRC
Records from day one
Plan for the bill
When you need to register
GOV.UK's set-up guide says you must register as a sole trader once you earn more than £1,000 from self-employment in a tax year (6 April to 5 April). Below that, the trading allowance means you may not need to tell HMRC at all. HMRC's registration service sets the deadline: tell HMRC by 5 October after the tax year you need to file for, or you could get a penalty.
Tax and National Insurance
You pay Income Tax on your profits and, above the profit threshold, Class 4 National Insurance, both through your Self Assessment return. If profits are below the small profits threshold you don't have to pay anything, but you can choose to pay voluntary Class 2 contributions.
Making Tax Digital for Income Tax is being phased in for sole traders and landlords by qualifying income, with HMRC checking each year's return to decide who joins next. The MTD checker below tells you where you stand.
Related
What else will you need?
- SA1SA1 Self Assessment registrationSA1 is HMRC's postal form for registering for Self Assessment when you aren't self-employed, for example because you owe Capital Gains Tax or have income from property, a pension or a trust.
- SA103SA103 self-employment pagesSA103 is the self-employment section of the Self Assessment return.
- TemplateSole trader income and expenses trackerA sole trader income and expenses tracker records every sale and business cost through the tax year, so the self-employment pages of your tax return come straight from the totals.PDFExcel
- TemplateMileage logA mileage log records each business journey: the date, where you went, why, and the miles.PDFExcel
- Where to find itFind your UTRYour Unique Taxpayer Reference (UTR) is a 10-digit number HMRC gives you when you register for Self Assessment or set up a limited company.
- ChecklistVAT registration checklistYou must register for VAT if your taxable turnover for the last 12 months went over £90,000, or you expect it to in the next 30 days.PDF
Rather we did it?
Countify can handle this for you, for a fixed fee agreed upfront.
Questions
Frequently asked questions.
Do I need to register if I only earn a little on the side?
Not if your trading income is £1,000 or less in the tax year, because the trading allowance covers it. Over that, you need to register for Self Assessment.
When is the deadline to register?
5 October after the end of the tax year you need to send a return for. Registering late can mean a penalty.
Do I need a separate business bank account?
HMRC doesn't require one for sole traders, but a separate account makes your records far easier to keep and check.
When do I need to register for VAT?
When your taxable turnover over the last 12 months goes over £90,000, or you expect it to in the next 30 days. You can also register voluntarily.
Checked against GOV.UK on · Reviewed by Kamran Ishaq FCCA, Founder & CEO, on .
Sources: Set up as a sole trader (opens in a new tab) (HM Revenue & Customs); Check how to register for Self Assessment (opens in a new tab) (HM Revenue & Customs); Business records if you're self-employed: what records to keep (opens in a new tab) (HM Revenue & Customs); Self-employed National Insurance rates (opens in a new tab) (HM Revenue & Customs); Find out if and when you need to use Making Tax Digital for Income Tax (opens in a new tab) (HM Revenue & Customs); Register for VAT: when to register (opens in a new tab) (HM Revenue & Customs); Payments on account (opens in a new tab) (HM Revenue & Customs).