How to Register as a Sole Trader UK — Step by Step
A sole trader is the simplest way to start a business in the UK. You are the business: no separate company, no Companies House filing, no registration fee. You keep the profits after tax, make all the decisions, and are personally responsible for the business’s debts. Registering is free and takes about 15 minutes online — this guide covers how to register as a sole trader UK, the whole process in eight steps.
Do you need to register at all?
You need to register if you earn more than £1,000 from self-employment in a tax year. That £1,000 is the trading allowance: at or below it, you usually do not need to register with HMRC or report the income. Above £1,000, you must register — even if you also have a job. You can be employed and self-employed at the same time: employed income is taxed through PAYE, self-employed income through Self Assessment.
You can start trading before you register — just do not leave it too long: the deadline is 5 October after the end of the tax year in which you started trading (see step 7). The trading allowance is set to rise to £3,000 from 6 April 2027, announced in Budget 2026 and subject to the Finance Bill — treat it as announced, not yet law.
Step 1 — Check you are self-employed
Before you register, make sure you are genuinely self-employed rather than an employee: employees have tax and National Insurance taken from their pay, while self-employed people sort it out themselves. HMRC has a free online employment status checker (the Check Employment Status for Tax tool, or CEST). It asks who controls your work, whether you can send someone else to do it, and who takes the financial risk, then gives HMRC’s view of your status. Getting the status wrong can mean back tax, National Insurance and penalties.
Step 2 — Choose a trading name
You can trade under your own name, or under a business name such as “Sarah Jones Plumbing”. You do not have to register the name anywhere, but do not add “Ltd” or “Limited”, do not use a name that is misleading, offensive, or suggests a connection with the government or a regulated profession you are not part of, and check the name is not already used by another business in your area or online. A quick search on Companies House and the web will usually show this.
Step 3 — Register on GOV.UK
Register online on GOV.UK, through the “Set up as a sole trader” service — free, about 15 minutes. You need your National Insurance number, the date you started trading (or plan to start), a description of what you do, and your personal details. You will create or sign in to a Government Gateway account — your HMRC online account, so keep the user ID safe. If you already have a UTR from earlier self-employment, use form CWF1 to tell HMRC about the new self-employment instead of registering from scratch.
Step 4 — Wait for your UTR
After you register, HMRC posts you a 10-digit Unique Taxpayer Reference (UTR), usually within about 10 working days (up to 15, or 21 if abroad). It is your personal tax reference number — keep it safe. You cannot file a Self Assessment return without it, so if it has not arrived after 15 working days, contact HMRC.
Step 5 — Set up your online account with the activation code
Separately, HMRC posts you an activation code for your Government Gateway Self Assessment account. Enter it online within 28 days or it expires and you will need a new one. Once activated, you can file your return online and see what tax you owe.
Step 6 — Set up your records from day one
Good bookkeeping starts the day you start trading, not the day your tax return is due. Keep records of all sales and income, all business expenses with receipts, and any personal money put into the business or taken out. A spreadsheet is fine for a small business — just keep everything in one place and up to date.
A business bank account is not legally required for sole traders — unlike for limited companies — but it is strongly recommended: it keeps business money apart from personal money and makes records far easier to follow. Think about insurance too: public liability covers injury or property damage from your work, and professional indemnity covers claims about advice or professional work. Neither is legally required for most sole traders, but many clients ask for proof before they hire you. And note your allowable expenses — costs deductible before tax, such as materials, travel, phone costs and a share of home costs if you work from home.
Step 7 — Know your deadlines
There are two deadlines that matter most:
| Deadline | What it is |
|---|---|
| 5 October after the tax year you started trading | Last date to tell HMRC |
| 31 January after the tax year ends | Self Assessment return due, and any tax owed must be paid |
Example: you start trading in September 2026 (2026/27 tax year, 6 April 2026 to 5 April 2027). Tell HMRC by 5 October 2027; your first return and any tax owed are due by 31 January 2028. (Started in 2025/26? The register deadline was 5 October 2026 and the return is due 31 January 2027.) Missing the 5 October deadline can mean a “failure to notify” penalty, based on the tax unpaid — so register on time.
Step 8 — Check VAT and Making Tax Digital
VAT. You must register for VAT once your VAT-taxable turnover exceeds £90,000 in any rolling 12 months — a rolling test, not a tax-year test, so check turnover monthly once you get close. You can also register voluntarily below £90,000, which lets you reclaim VAT on purchases.
Making Tax Digital (MTD) for Income Tax. From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates to HMRC using compatible software. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. Below the threshold, MTD does not apply yet — but digital records are good practice anyway.
Sole trader or limited company?
A sole trader setup is simple, cheap and quick — which is why most people learn how to register as a sole trader UK before worrying about a limited company. A limited company is a separate legal entity: it protects your personal assets if the business gets into debt, and it can be more tax-efficient once profits grow, but it means Companies House filings, annual accounts, and more admin. Most people start as a sole trader and switch later, when profits justify the extra admin.
What to check now
- Check you earn more than £1,000 from self-employment — if so, register.
- Run HMRC’s employment status checker if your status is not clear-cut.
- Choose a trading name and check nobody else is using it.
- Register on GOV.UK — free, about 15 minutes.
- Watch for your UTR and activation code (enter within 28 days).
- Open a separate business bank account and keep records from day one.
- Note your deadlines: 5 October to register, 31 January for return and payment.
- Check turnover against the £90,000 VAT threshold and the MTD thresholds.
Frequently asked questions
How long does it take to register as a sole trader?
The online form takes about 15 minutes. Your UTR arrives by post, usually within about 10 working days.
How much does it cost to register as a sole trader?
Nothing — registration is free. You only pay tax and National Insurance on your profits.
Can I start trading before I register?
Yes, but you must tell HMRC by 5 October after the end of the tax year in which you started.
Do I need a business bank account as a sole trader?
No, it is not legally required. But a separate account is strongly recommended — it keeps your records clean.
Can I be employed and self-employed at the same time?
Yes. Employed income is taxed through PAYE, self-employed income through Self Assessment. You still need to register once self-employment income goes over £1,000 in a tax year.
This article gives general information about UK tax, not personal financial or tax advice. Tax rules can change, and your situation may be different. Check GOV.UK or speak to a qualified accountant before you act.
