Registering as a sole trader with HMRC is free and takes about 10 minutes online. You register for Self Assessment at gov.uk/register-for-self-assessment, and HMRC sends your Unique Taxpayer Reference (UTR) within 10 working days. You must register by 5 October following the tax year you started trading.
This guide covers everything you need to know about registering as a sole trader.
What is a Sole Trader?
A sole trader is a self-employed person who runs a business as an individual. There's no legal separation between you and your business—you're personally responsible for all business debts.
| Aspect | Sole Trader | |--------|-------------| | Legal status | You and business are one entity | | Liability | Personal liability for debts | | Registration | Free with HMRC | | Tax return | Self Assessment | | Accounts | Private (not filed publicly) |
Common sole trader businesses:
- Freelancers and consultants
- Tradespeople (plumbers, electricians)
- Delivery drivers (Uber, Deliveroo)
- Online sellers (eBay, Etsy)
- Tutors and coaches
- Photographers and designers
When to Register
Registration Deadline
Register by 5 October following the end of the tax year you started trading:
| When You Started | Tax Year | Registration Deadline | |------------------|----------|----------------------| | 6 April 2024 – 5 April 2025 | 2024/25 | 5 October 2025 | | 6 April 2025 – 5 April 2026 | 2025/26 | 5 October 2026 |
Can I Register Early?
Yes. You can register as soon as you know you'll be self-employed—even before your first job. Early registration is helpful for:
- Getting your UTR sooner
- Opening a business bank account (some require UTR)
- Setting up accounting software
- Invoicing clients who need your UTR
Do I Need to Register?
Must register:
- Self-employment income over £1,000/year
- Any amount if you want to claim expenses
Don't need to register:
- Self-employment income £1,000 or less (Trading Allowance)
- One-off sales (not regular trading)
- Hobby income you don't want to claim expenses on
What You Need to Register
Personal Information
- National Insurance number
- Full name
- Date of birth
- Current address
- Phone number
- Email address
Business Information
- Business name (can be your own name)
- What your business does (brief description)
- Business start date (or intended start date)
- Business address (can be home address)
- Business phone number
Step-by-Step Registration
Step 1: Go to HMRC's Website
Visit gov.uk/register-for-self-assessment
Click "Register for Self Assessment."
Step 2: Create a Government Gateway Account
If you don't have one:
- Click "Create sign in details"
- Enter your email address
- HMRC sends a confirmation code
- Create a password
- Set up account recovery options
Already have an account? Sign in with your User ID and password.
Step 3: Select Your Registration Type
Choose: "Self-employed or sole trader"
Other options are for landlords, directors, or partnerships—different situations.
Step 4: Complete Personal Details
Enter your:
- Full legal name
- National Insurance number
- Date of birth
- Home address
- Contact details
Step 5: Complete Business Details
Business name: Your trading name. Can be:
- Your own name (Sarah Jones)
- A business name (SJ Design Services)
- Either works legally—it's your choice
Business description: Brief description of what you do. Examples:
- "Graphic design services"
- "Plumbing and heating engineer"
- "Freelance software development"
- "Online retail"
Business start date: The date you started (or will start) trading. This can be:
- A past date (if already trading)
- Today's date
- A future date
Business address: Where you run your business from. Your home address is fine.
Step 6: Answer Additional Questions
HMRC asks about other income:
- Do you have other self-employments? (If you have multiple businesses)
- Do you have rental income? (Register for both at once)
- Are you a company director? (If also a director)
Step 7: Submit
Review your details and submit the registration.
What happens next:
- HMRC processes your registration
- Your UTR is posted within 10 working days
- Self Assessment is added to your Government Gateway account
Getting Your UTR
What is a UTR?
A Unique Taxpayer Reference (UTR) is your 10-digit tax identification number. Example: 1234567890
When It Arrives
HMRC posts your UTR within 10 working days of registration. The letter includes:
- Your 10-digit UTR
- Instructions for filing
- Important deadlines
If It Doesn't Arrive
After 15 working days with no letter:
- Check your post carefully
- Sign in online — UTR sometimes appears before the letter
- Call HMRC — 0300 200 3310 (you'll need to verify identity)
Finding Your UTR Later
| Where to Look | Details | |---------------|---------| | HMRC letters | Any Self Assessment correspondence | | Government Gateway | Sign in to your tax account | | Previous tax returns | On SA302 or submitted returns | | Your accountant | If you've used one |
After Registration: Next Steps
1. Set Up Online Access
Link your UTR to your Government Gateway account:
- Sign in at gov.uk
- Select "Add Self Assessment"
- Enter your UTR
- HMRC may post an activation code (another 7-10 days)
2. Open a Business Bank Account
While not legally required, a separate account makes life easier:
- Clear separation of business/personal
- Easier record-keeping
- Simpler expense tracking
- Professional image
Many banks offer free business accounts: Starling, Tide, Mettle, Monzo Business.
3. Start Keeping Records
From day one, track:
| Record | Why | |--------|-----| | All income | Know what to report | | All expenses | Reduce your tax bill | | Bank statements | Proof of transactions | | Receipts | Evidence for claims | | Mileage | If claiming vehicle costs |
Keep records for 6 years after the tax year.
4. Choose Accounting Software
Options for sole traders:
| Software | Price | Best For | |----------|-------|----------| | TaxFolio | From £69.99/year | Tax-focused, MTD-ready | | FreeAgent | From £14.50/month | Invoicing + accounting | | QuickBooks | From £12/month | Established brand | | Spreadsheet | Free | Very simple businesses |
5. Understand Your Tax Obligations
As a sole trader, you'll pay:
Income Tax on profits: | Band | Rate | |------|------| | £0 – £12,570 | 0% | | £12,571 – £50,270 | 20% | | £50,271 – £125,140 | 40% | | Over £125,140 | 45% |
National Insurance:
- Class 2: £3.45/week (profits over £6,725)
- Class 4: 6% on £12,570-£50,270, 2% above
6. Set Aside Money for Tax
A common mistake: spending all your income, then struggling when tax is due.
Rule of thumb: Set aside 25-30% of profits for tax.
Open a separate savings account just for tax money.
Choosing a Business Name
Your Options
- Your own name — Sarah Jones
- Your name + description — Sarah Jones Design
- A trading name — Bright Ideas Design Studio
Rules for Trading Names
- Cannot include: "Limited", "Ltd", "LLP", or "PLC" (these suggest a company)
- Cannot be: offensive or misleading
- Can include: most other words
Using a Trading Name
If using a name different from your own:
- Display your real name on invoices and letters
- Display it at business premises (if applicable)
- You don't need to register the name anywhere
Example Invoice:
Bright Ideas Design Studio Trading name of Sarah Jones 14 High Street, London
Sole Trader vs Other Options
Sole Trader vs Limited Company
| Factor | Sole Trader | Limited Company | |--------|-------------|-----------------| | Setup cost | Free | ~£50-100 | | Complexity | Simple | More admin | | Tax (lower profits) | Often lower | Often higher | | Tax (higher profits) | Often higher | Often lower | | Liability | Personal | Limited to company | | Privacy | Private | Public accounts |
Consider a limited company if profits regularly exceed £40,000-50,000.
Learn more: Sole Trader vs Limited Company
Sole Trader vs Partnership
If working with others:
- Partnership: Share profits and losses, joint liability
- Limited company: Separate legal entity, share ownership
Sole trader is for individuals only.
Common Registration Questions
Do I need permission to be a sole trader?
No general permission needed. But some trades require:
- Licences (e.g., taxi driving, food handling)
- Professional registration (e.g., gas safe, financial adviser)
- Insurance (e.g., professional indemnity)
Can I be employed AND a sole trader?
Yes. Many people have a day job plus self-employment. You'll:
- Pay PAYE tax on employment income
- Pay Self Assessment on self-employment profits
- File an annual Self Assessment return covering both
Can I register from abroad?
If you're a UK resident working abroad, or a non-resident with UK self-employment:
- Registration process is similar
- Additional rules may apply
- Consider seeking specialist advice
What if I stop being self-employed?
If you stop trading:
- File your final Self Assessment return
- Tell HMRC you're no longer self-employed
- They'll close your Self Assessment record
Making Tax Digital
From April 2026 (gross income over £50,000) or April 2027 (over £30,000), sole traders must comply with Making Tax Digital:
- Keep digital records
- Submit quarterly updates
- Use HMRC-recognised software
If you're registering now, choose MTD-compatible software to be ready.
Registering with TaxFolio
Once registered with HMRC, TaxFolio helps you manage your sole trader taxes:
- Bank connection — import income and expenses automatically
- AI categorisation — transactions sorted into tax categories
- Real-time tax — see your liability throughout the year
- Direct filing — submit Self Assessment to HMRC
- MTD-ready — compliant when you need to be
- From £69.99/year — no monthly fees
Start your free 30-day trial and get your sole trader finances organised.
Quick Reference: Registration Checklist
- [ ] Check if you need to register (income over £1,000)
- [ ] Gather: NI number, business details, start date
- [ ] Go to gov.uk/register-for-self-assessment
- [ ] Create Government Gateway account
- [ ] Select "Self-employed or sole trader"
- [ ] Complete personal and business details
- [ ] Submit registration
- [ ] Wait for UTR (10 working days)
- [ ] Set up online tax account
- [ ] Open business bank account
- [ ] Start keeping records
- [ ] Set aside 25-30% for tax
You're now a registered sole trader.