How to Register as a Sole Trader in the UK: Deadlines, the £1,000 Rule and Step-by-Step

Last updated 12 June 2026

What is a sole trader?

A sole trader is a self-employed person who owns and runs their business as an individual. There is no legal separation between you and the business: you keep all the profits after tax, and you are personally liable for any debts. It is the simplest UK business structure — no Companies House registration, no statutory accounts, no separate corporation tax — which is why it is the default choice for freelancers, contractors, delivery riders and side hustlers. You can trade under your own name or a business name, and you can take on employees and still be a sole trader.

When must you register as a sole trader?

You must register for Self Assessment as a sole trader once you earn more than £1,000 from self-employment in a tax year (6 April to 5 April). The £1,000 test is on your gross income — total takings before any expenses are deducted — not your profit. Below that, the trading allowance gives you full relief and you do not need to tell HMRC at all.

You can also choose to register voluntarily below £1,000. The two common reasons (gov.uk):

• You want to prove you are self-employed — for example to claim Tax-Free Childcare.
• You want to make voluntary Class 2 National Insurance payments (£3.65/week in 2026/27) to protect your State Pension and certain benefit entitlements.

How does the £1,000 trading allowance work?

The trading allowance is a tax-free allowance of up to £1,000 a year against gross trading income. If your gross income is £1,000 or less, the income is simply not taxable and does not need declaring. If it is more, you must register — but you can then choose to deduct the £1,000 allowance instead of your actual expenses when you fill in your return.

Rule of thumb: claim the allowance if your real expenses are under £1,000; claim actual expenses if they are higher — for example a delivery driver claiming 55p per business mile for the first 10,000 miles will usually beat £1,000 easily. One catch: you cannot use the trading allowance against income from a company you (or someone connected to you) own or control, a partnership you are connected to, or your employer (or your spouse's or civil partner's employer).

What is the deadline to register?

You must tell HMRC by 5 October following the end of the tax year in which you needed to register — in other words, by 5 October in your business's second tax year. Register after that date and you could get a penalty (gov.uk).

Two practical points. First, do not leave it until 5 October: your UTR takes around 15 days to arrive and you need it to file. Second, if your tax bill is over £1,000, HMRC will usually also ask for payments on account towards the following year — half on 31 January and half on 31 July — so your first January bill can be roughly one and a half times the tax you expected. Our sole trader tax calculator shows the full picture, including payments on account.

How do you register, step by step?

The whole process is online and free. In order:

1. Check you have a National Insurance number. You will need it to register. If you do not have one, apply through gov.uk first.
2. Choose your business name (optional). You can trade under your own name or pick a trading name. A sole trader name must not include "limited", "Ltd", "limited liability partnership", "LLP", "public limited company" or "plc", must not be offensive, and must not be too similar to another company's trade mark. You must include your own name and the business name (if you have one) on official paperwork such as invoices and letters. There is no separate name register for sole traders.
3. Register for Self Assessment on gov.uk. Search "register for Self Assessment", sign in or create a Government Gateway user ID, and tell HMRC you are self-employed. You will give your personal details, NI number, start date and the nature of your business.
4. Wait for your UTR. HMRC posts your 10-digit Unique Taxpayer Reference, usually around 15 days after you register (longer overseas). You can also find it later in the HMRC app or your personal tax account. Keep it safe — you need it to file every return.
5. Set up record keeping from day one. Record all business income and expenses. The cash basis (recording money when it actually comes in and goes out) is the default accounting method from 2024/25. Keep records for at least 5 years after the 31 January submission deadline of the relevant tax year. A separate business bank account is not legally required for sole traders, but it makes the bookkeeping far easier.
6. File a return every year. Once registered, you must file annually — even in a year you made a loss or owe nothing — until you tell HMRC you have stopped trading.

What tax and National Insurance will you pay in 2026/27?

You pay Income Tax and Class 4 National Insurance on your profits (income minus expenses or the trading allowance), not your turnover. The first £12,570 is covered by the Personal Allowance, assuming it is not used up by other income such as a salary.

Class 2 NI is now £0: if your profits are £7,105 or more (the Small Profits Threshold), your contributions are treated as paid automatically, protecting your State Pension record. Below £7,105 you can pay voluntarily at £3.65 a week. See our guides to National Insurance classes and UK tax bands for the detail, or jump straight to the calculators — there are dedicated tools for Deliveroo, Uber and Amazon Flex earnings.

What about Making Tax Digital and VAT?

From 6 April 2026, Making Tax Digital for Income Tax applies to sole traders and landlords with qualifying income (gross self-employment plus property income) over £50,000, tested on the 2024/25 tax return. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Because the test looks at a return you have already filed, a brand-new sole trader is not caught immediately — but a strong first year can pull you in later. MTD means keeping digital records and sending cumulative quarterly updates (standard deadlines 7 August, 7 November, 7 February and 7 May) through compatible software. Check where you stand with the qualifying income checker and quarterly deadline calculator, or read the full Making Tax Digital guide.

VAT is separate again: registration only becomes compulsory once your taxable turnover passes £90,000 in a rolling 12-month period — see our VAT registration threshold guide.

Sources: Become a sole trader, Register for Self Assessment, Tax-free allowances on property and trading income, Find your UTR number and Business records for the self-employed (gov.uk), verified 12 June 2026. Estimates for information only — not regulated tax advice.