How to Register as a Sole Trader in the UK

You register as a sole trader by telling HMRC you’re self-employed and signing up for Self Assessment. It’s free, it’s done online, and you need to do it once your self-employed income passes £1,000 in a tax year. The deadline is 5 October in your business’s second tax year, and missing it can mean a penalty. This guide is for anyone in the UK starting out on their own — it covers who needs to register, exactly how to do it, and what happens next.

What it means to register as a sole trader

Being a sole trader means you run your business as a self-employed individual rather than through a company. There’s no separate legal entity — you and the business are the same for tax, and you keep the profits after tax. It also means unlimited liability, so you’re personally responsible for any business debts.

“Registering” is simply telling HMRC you’re earning self-employed income so you can report it through Self Assessment, HMRC’s system for paying tax that isn’t taken automatically through PAYE. You don’t register a sole trader business at Companies House — that’s only for limited companies.

Do you need to register as a sole trader?

You need to register if your gross self-employed income was more than £1,000 in a tax year (6 April to 5 April). Below that, the £1,000 trading allowance usually covers it and you may not need to register or report the income at all.

It doesn’t matter whether the work is full-time, a side hustle alongside a job, or occasional freelance work. Once you go over £1,000, HMRC needs to know. You can be employed and a sole trader at the same time — your employer handles PAYE on your wages, and you report the self-employed side yourself.

When do you need to register?

Register by 5 October in your business’s second tax year — that is, the 5 October after the end of the tax year in which you started trading.

For example, if you began working for yourself in June 2025, that falls in the 2025-26 tax year, so your deadline to register is 5 October 2026. Leaving it later risks a “failure to notify” penalty, so it’s worth registering as soon as you know you’ll pass the £1,000 threshold rather than waiting.

How to register as a sole trader, step by step

The whole process is online and free. Here’s what to do:

1. Check you need to register — confirm your self-employed income is over £1,000.
2. Set up a Government Gateway account on GOV.UK if you don’t already have one.
3. Register for Self Assessment and choose the option for working for yourself as a sole trader.
4. Enter your details — your National Insurance number, business start date and the type of work you do.
5. Get your UTR — HMRC posts your 10-digit Unique Taxpayer Reference to your home address, usually within about 10 to 15 working days.
6. Activate your online account using the activation code HMRC sends, so you can file your return.

There’s no fee to register or to be a sole trader. You can start trading straight away — you don’t have to wait for your UTR to begin working, but you’ll need it before you file. You can register directly on GOV.UK’s Self Assessment registration page.

What you’ll need to hand

• Your full name, date of birth and home address
• Your National Insurance number
• The date you started (or will start) trading
• The type of work or trade you do
• Your trading name, if you use one

What happens after you register

Once you’re registered, you’re in the Self Assessment system. Each year you’ll file a tax return that reports your self-employed income and expenses, work out your tax and National Insurance, and pay what you owe by 31 January.

Your first return can feel like the hardest part, but it’s far easier if your records are tidy through the year. Our sole trader bookkeeping guide sets out a simple monthly routine, and knowing your allowable expenses means you only pay tax on your actual profit.

Your responsibilities as a sole trader

Registering is the start. As a sole trader you also need to keep on top of a few ongoing duties.

Income Tax and National Insurance

You pay Income Tax on your profits through Self Assessment. You’ll usually also pay Class 4 National Insurance — for 2026-27 that’s 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Most sole traders no longer pay Class 2 National Insurance; it’s treated as paid to protect your benefits record, though you can pay it voluntarily if your profits are low. The current figures are on GOV.UK.

VAT

You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect to pass it within the next 30 days. Many sole traders never reach this, but it’s worth watching as you grow. You can also register voluntarily below the threshold if it suits your business.

Making Tax Digital

From April 2026, sole traders with qualifying income over £50,000 must follow Making Tax Digital for Income Tax — keeping digital records and sending HMRC quarterly updates. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, so it’s worth setting up good digital habits early.

Keeping records

Keep records of everything you earn and spend, along with receipts and invoices, for at least five years after the 31 January filing deadline. Good records make your return quicker and help you claim every allowable cost. If you run a shop or several income streams, our small business bookkeeping guide may help too.

Sole trader or limited company?

Registering as a sole trader is the simplest way to start, but it’s worth knowing the alternative. A limited company is a separate legal entity, which limits your personal liability and can be more tax-efficient at higher profits, but it comes with more admin and filing at Companies House.

Many people start as a sole trader and move to a company later as they grow. If you’re weighing it up, our accounting team can talk it through.

Common mistakes when registering

• Leaving registration until the last minute and missing the 5 October deadline
• Assuming small side income doesn’t count once it passes £1,000
• Not activating the online account, so the first return can’t be filed
• Mixing business and personal money, which makes records messy from the start
• Throwing away receipts and losing allowable expenses

Frequently asked questions

Do I need to register as a sole trader?

Yes, if your gross self-employed income is more than £1,000 in a tax year. Below that, the £1,000 trading allowance usually means you don’t need to register. It applies whether self-employment is your main work or a side income.

How much does it cost to register as a sole trader?

Nothing. Registering with HMRC and being a sole trader is free. You only pay Income Tax and National Insurance on your profits once you’re trading.

When is the deadline to register?

By 5 October in your business’s second tax year — the 5 October after the tax year you started. If you began trading in 2025-26, register by 5 October 2026.

How long does it take to get a UTR?

HMRC usually posts your Unique Taxpayer Reference within about 10 to 15 working days of registering. You can start trading before it arrives, but you’ll need it to file your Self Assessment return.

Do I need to register if I earn under £1,000?

Usually no. The trading allowance covers gross self-employed income up to £1,000, so you don’t need to register or report it. Keep an eye on your total, as you must register once you go over.

Do sole traders pay National Insurance?

Yes. Most pay Class 4 National Insurance on profits above £12,570 through Self Assessment. Class 2 is generally treated as paid rather than charged, though you can pay it voluntarily if your profits are low.

Can I be employed and a sole trader at the same time?

Yes. Your employer deals with tax on your wages through PAYE, and you report your self-employed income separately through Self Assessment. Many people run a side business alongside a job this way.

This guide provides general information and does not replace advice based on your individual circumstances. Tax rules, rates and thresholds can change, so check current GOV.UK guidance or ask a qualified adviser before you act.