So you’ve decided to work for yourself. Whether you’re freelancing, starting a trade, picking up consulting work, or turning a side hustle into something more serious – if you’re earning over £1,000 a year from it, HMRC needs to know.
Registering as self-employed is straightforward. It takes about 15 minutes online, and once it’s done, you’ll have a Unique Taxpayer Reference (UTR) number and be set up for Self Assessment. The harder part is understanding what comes after: the tax obligations, the record-keeping, the deadlines, and – from this year – Making Tax Digital.
Here’s everything you need to know to get registered and start on the right foot.
Do You Need to Register?
You must register with HMRC for Self Assessment if any of the following apply:
- You earned more than £1,000 from self-employment in a tax year (this is gross income, not profit)
- You need to prove you’re self-employed to claim Tax-Free Childcare or other benefits
- You want to make voluntary National Insurance contributions to protect your State Pension entitlement
That £1,000 figure is the trading allowance. If your self-employed income stays below it for the entire tax year, you don’t need to register or report it. But the moment you go over – even by a pound – you need to be registered.
If you’re not sure whether what you’re doing counts as self-employment, the key question is whether you’re working for yourself rather than being employed by someone else. You set your own hours, you find your own clients, you’re not on anyone’s payroll. HMRC’s employment status tool can help if you’re unsure.
How to Register: Step by Step
1. Create a Government Gateway Account
If you don’t already have one, you’ll need a Government Gateway account. This is the login system for all HMRC online services. You’ll use it to register, file your tax returns, and manage your tax affairs going forward.
Have your National Insurance number to hand – you’ll need it during the setup.
2. Register for Self Assessment
Once you’re logged in, register for Self Assessment and Class 2 National Insurance. You’ll be asked for:
- Your full name, date of birth, and address
- Your National Insurance number
- The nature of your business (a brief description of what you do)
- The date you started trading
- Your business address and contact details
- A business name, if you’re using one (you can trade under your own name)
The process takes about 15 minutes. You can also register by phone or post if you prefer, but online is faster.
3. Receive Your UTR
After registering, HMRC will send you a Unique Taxpayer Reference (UTR) number by post. This is a 10-digit number that stays with you for life – even if you stop being self-employed and come back to it later.
It usually arrives within 10 working days (21 if you’re abroad). You’ll also receive a separate letter with an activation code for your online account.
Keep your UTR safe. You’ll need it every time you file a tax return, contact HMRC, or provide proof of self-employment to a mortgage lender or benefits provider.
4. The Registration Deadline
You should register as soon as you start trading, but the hard deadline is 5 October after the end of the tax year in which you started your business.
So if you started self-employed work in August 2026 (which falls in the 2026/27 tax year), you must register by 5 October 2027. In practice, don’t leave it that long. Registering early gives you time to get your UTR, set up your online account, and start keeping records properly from day one.
If you miss the deadline, HMRC can charge penalties – even if you don’t owe any tax.
What Happens After You Register
Registration is just the starting point. Once you’re set up, you have ongoing obligations that run for as long as you’re self-employed.
File a Self Assessment Tax Return Every Year
You must complete a Self Assessment return for every tax year you’re registered – even if you made a loss or had no income. The tax year runs from 6 April to 5 April. For the 2026/27 tax year, your online return is due by 31 January 2028, and any tax owed must be paid by the same date.
If you stop being self-employed, tell HMRC. Otherwise, they’ll keep expecting a return, and you’ll get automatic penalties if you don’t file one.
Pay Income Tax and National Insurance
As a sole trader, you pay income tax on your business profits and Class 4 National Insurance.
Class 2 NIC is no longer payable as a separate charge, but you’ll still receive National Insurance credits automatically if your profits exceed the lower threshold.
Payments on Account
If your tax bill exceeds £1,000, HMRC will ask for payments on account – advance payments towards next year’s bill. These are due on 31 January and 31 July each year, and each one is half of your previous year’s tax bill.
This catches many new sole traders off guard. In your second year, you could face your first year’s full tax bill plus half of next year’s estimated bill all at once in January. Budget for this from the start.
Keep Records
You must keep records of all your business income and expenses. This includes sales invoices, receipts, bank statements, and mileage logs. Records must be kept for at least five years after the 31 January filing deadline for the relevant tax year.
There are no rules about format – paper, spreadsheets, or accounting software all work. But if you’re earning over £50,000 and fall within Making Tax Digital (see below), you must keep digital records in compatible software.
Making Tax Digital: What’s Changed
From April 2026, sole traders and landlords with qualifying income over £50,000 must comply with Making Tax Digital for Income Tax. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
In practice, this means:
- Keeping your records digitally in MTD-compatible software
- Submitting quarterly updates of income and expenses to HMRC (these aren’t full tax returns – just category totals)
- Filing a final declaration by 31 January as usual
MTD sign-up is separate from Self Assessment registration, but you need to be registered for Self Assessment first.
If you’re below the £50,000 threshold, MTD doesn’t apply to you yet. But adopting digital record-keeping now – even if you’re not legally required to – makes tax time easier and puts you ahead of the curve when the thresholds drop.
Setting Up Your Business Properly
Registration is the legal minimum, but there are a few other things worth doing from the start that will save you time, money, and hassle later on.
Open a Separate Bank Account
There’s no legal requirement for sole traders to have a business bank account. But mixing personal and business transactions in one account makes bookkeeping a nightmare and makes it much harder to identify allowable expenses come tax time. A dedicated account – even a free one – keeps things clean.
Understand What You Can Claim
You can deduct allowable business expenses from your income to reduce your taxable profit. These must be costs incurred “wholly and exclusively” for the purpose of your business. Common examples include:
- Equipment, tools, and software
- Travel expenses (fuel, public transport, not commuting)
- Office supplies and stationery
- Marketing and advertising
- Professional fees (accounting, legal)
- A proportion of home costs if you work from home (heating, broadband, etc.)
HMRC publishes simplified expense rates for things like home office use and business mileage, which can be easier than tracking actual costs.
Consider VAT Registration
If your turnover exceeds £90,000 in any 12-month period, you’re legally required to register for VAT. Below that threshold, registration is voluntary – but it can be worthwhile if most of your clients are VAT-registered businesses (because they can reclaim the VAT you charge, so it doesn’t affect your pricing).
If you’re nowhere near the threshold and your clients are individuals rather than businesses, voluntary registration usually isn’t worth the admin.
Choose the Right Accounting Method
As a sole trader, you can use either the cash basis or traditional accruals method for calculating your profits.
Cash basis is simpler – you record income when you receive it and expenses when you pay them. It’s the default for most sole traders with turnover below £150,000.
Accruals accounting records income when it’s earned and expenses when they’re incurred, regardless of when the cash moves. It’s more complex but gives a more accurate picture of your financial position, particularly if you invoice in advance or have significant stock.
Most new sole traders start on cash basis and that’s perfectly fine. If your business grows, your accountant can advise on whether switching makes sense.
Common Mistakes to Avoid
A few things that trip up new sole traders more than anything else:
- Not setting money aside for tax. A good rule of thumb is to put 25–30% of your profits into a separate savings account as you go. When January comes, you’ll be glad you did.
- Forgetting about payments on account. Your second January tax bill can be roughly 150% of what you expected if you didn’t plan for the advance payments.
- Missing the registration deadline. Register as soon as you start trading. Waiting until you “get around to it” is how penalties happen.
- Not claiming expenses you’re entitled to. Many sole traders pay more tax than they need to because they don’t track their expenses properly or don’t know what’s deductible.
- Not telling HMRC when you stop. If you cease trading and don’t deregister, HMRC will continue to expect returns and issue penalties.
How Double Point Can Help
Getting registered is the easy part. Staying on top of your tax obligations, maximising your expense claims, and making sure everything is filed correctly and on time – that’s where most new sole traders need support.
At Double Point, we work with self-employed people from day one. We can help you register, set up your record-keeping, file your Self Assessment return, and advise on everything from allowable expenses to whether and when it makes sense to incorporate. If you qualify for MTD, we can get you set up with compatible software and handle your quarterly submissions.
Book a free consultation with us today, and let’s make sure your self-employment starts on the right foot.