How to Register as a Sole Trader in the UK - Fleximize

How to Register as a Sole Trader in the UK

This comprehensive guide covers HMRC rules, self-employment tax, and how to pay income tax and National Insurance.

By Mark Tuvey

Record numbers of professionals – accountants, creatives, consultants – are turning their backs on traditional employment and going solo. And it’s easy to see why. Becoming a sole trader gives you the freedom to choose your work, set your own rates, and build a business on your terms.

If you're considering taking the leap, this guide covers everything you need to know about how to register as a sole trader in the UK, manage your responsibilities, and grow confidently as a self-employed business owner.

What is a sole trader?

A sole trader is someone who runs their own business as an individual. It’s the most straightforward type of self-employment in the UK. You keep all the profits after tax, but you're also personally responsible for any losses or debts.

If you’re offering a service, selling goods, or freelancing – whether full-time or alongside a job – you might already be classed as self-employed in HMRC’s eyes. That’s why understanding your employment status and registering correctly is so important.

Do I need to register as a sole trader?

If you’re earning more than £1,000 per tax year from self-employed income, you must register as self-employed with HMRC. This applies whether it’s a side hustle, part-time gig, or your main source of income.

Not sure if you need to register? Ask yourself:

If the answer’s yes, you’re likely classed as self-employed and should register for Self Assessment.

Even if you’re below the £1,000 threshold, registering early can make it easier to manage your taxes, claim allowable expenses, and prove your business status when working with clients or applying for funding.

How to register as a sole trader

Registering as a sole trader is simple. Here’s how to do it:

1. Set up a Government Gateway account

If you don’t already have one, head to gov.uk to set up a Government Gateway user ID. You’ll use this to access HMRC services.

2. Register with HMRC for Self Assessment

Next, register for Self Assessment as a sole trader via the HMRC website. You’ll need to provide:

Once submitted, HMRC will send you a Unique Taxpayer Reference (UTR) by post, along with confirmation of your self-employed status.

And that’s it! You’re now officially registered as a sole trader.

What are your responsibilities as a sole trader?

Once you’re registered, you’ll need to stay on top of a few things:

1. Submit a Self Assessment tax return each year

You’ll need to report your income and expenses to HMRC annually through Self Assessment. This helps calculate how much Income Tax and Class 2/4 National Insurance you owe.

2. Keep accurate financial records

Keep receipts, invoices, bank statements, and mileage logs. Good record-keeping helps you stay organised and claim business expenses when the tax return rolls around.

3. Pay your tax on time

You’ll usually need to pay your tax bill by 31st January following the end of the tax year. If you owe more than £1,000, HMRC may ask for payments on account towards next year’s tax bill too.

Should I register for VAT?

Most sole traders won’t need to worry about VAT registration straight away. But you must register for VAT if your turnover exceeds £90,000 in any 12-month period.

You can also register voluntarily before hitting that threshold if it suits your business model – for example, if you work mainly with VAT-registered clients.

Registering for VAT means:

What business name can I use?

As a sole trader, you can use your own name or trade under a business name. Just make sure your chosen name:

You don’t need to officially register your business name unless you’re protecting a trademark, but it’s wise to check availability online and on Companies House.

Can I be employed and self-employed at the same time?

Yes – you can work for an employer and also be a self-employed sole trader on the side. You’ll still need to:

Your employer will continue to deduct tax through PAYE for your main job, while your self-employed earnings are taxed separately.

Understanding your employment status is especially important if you do a mix of freelance contracts and part-time work. HMRC looks at a range of factors, including how much control you have over your work, whether you use your own tools, and if you’re responsible for fixing mistakes.

Advantages of becoming a sole trader

Self-employment vs limited company: What’s the difference?

If your business starts to grow, you might consider setting up a limited company. The main differences are:

Sole Trader

Limited Company

You are personally liable for debts

Company is legally separate from you

Simple to register and run

More admin and reporting required

Profits taxed as personal income

Corporation tax + director’s salary/dividends

Suitable for smaller or simpler operations

Better for scaling, hiring, or seeking investment

Many small business owners start out as sole traders, then switch to a limited company once they’ve built up consistent income, contracts, or staff.

What kind of jobs can sole traders do?

You’d be surprised how many self-employed jobs you can do as a sole trader. Examples include:

If you’re delivering a service or product directly to clients, you probably qualify.

How to set up a business as a sole trader

Here’s a quick checklist:

About the author

Mark Tuvey is the Managing Director of Penny. Penny has given over 10,000 business owners the power to control cash flow on their terms by deciding exactly when their invoices get paid.


Your common questions answered

To register as a sole trader in the UK, you need to sign up for Self Assessment with HMRC.

This involves creating a Government Gateway account and submitting your personal details, business start date, and a short description of your work. Once approved, HMRC will send you a Unique Taxpayer Reference (UTR).

Yes, you must register as a sole trader if you earn more than £1,000 per tax year from self-employment.

Even if your earnings are lower, registering with HMRC can help you stay compliant, claim expenses, and access support.

To become self-employed in the UK, choose a business idea, set up a Government Gateway account, and register for Self Assessment with HMRC. You’ll then receive your UTR and can start invoicing clients, keeping records, and paying your own tax.

If you’re self-employed, you’ll need to pay Income Tax and National Insurance on your profits. This is known as self-employment tax, and it's paid via an annual Self Assessment tax return.

The current rates depend on your earnings and include Class 2 and Class 4 National Insurance contributions.

You pay income tax by submitting a Self Assessment return to HMRC every year. This return reports your income, expenses, and profit.

HMRC will calculate how much income tax and National Insurance you owe, which must be paid by 31st January each year.

When you're employed, your employer handles your taxes and pays you a salary. As a self-employed person, you’re responsible for your own tax and National Insurance, invoicing, and record-keeping. You’ll also need to register with HMRC and report your income annually.

You must register for VAT if your turnover exceeds £90,000 in a 12-month period.

However, you can register voluntarily before reaching the threshold if it benefits your business – for example, if you work with other VAT-registered companies or have large expenses you want to reclaim VAT on.

A UTR is a 10-digit number given to you by HMRC after you register as self-employed. You’ll need it to file your Self Assessment tax return and manage your tax account.

Visit gov.uk and follow the steps to register for Self Assessment online. Once registered, HMRC will post your UTR and you can log in to submit your returns, view payments, and track your self-employed tax.

Yes, if you’re freelancing or earning over £1,000 from any self-employed work, you must register with HMRC as a sole trader. This ensures you stay compliant and pay the correct self-employment tax.

Self-employment tax includes Income Tax and National Insurance contributions you pay on your profits as a sole trader. It’s calculated based on your annual income and reported via Self Assessment.

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