You've started picking up paid work on the side, or your hobby has quietly turned into a business. Now you're wondering whether HMRC needs to hear about it, and by when.
The short version: once your gross self-employed income for a tax year goes over £1,000, you almost certainly need to register for Self Assessment and tell HMRC you're trading. Miss the deadline and penalties can follow, so it pays to get this right early.
This guide is for new sole traders and people starting out on their own. We'll cover when registration is triggered, the exact deadline, how to register step by step, and a worked example of the tax you'd actually pay.
What counts as being self-employed?
You're self-employed if you run your own business and take responsibility for whether it succeeds or fails. HMRC looks at things like whether you have several customers at once, decide how and when you work, provide your own equipment, and charge an agreed price for your work.
If that sounds like you, you're a sole trader: the simplest way to work for yourself. There's no company to set up and no Companies House filing. You and the business are the same legal person for tax.
The trigger for HMRC isn't a job title, though. It's whether you're trading. You're trading if you sell goods or services regularly with the aim of making a profit. Selling the odd unwanted item from your loft isn't trading. Buying stock to resell each week, or invoicing clients for your time, is.
If you genuinely can't tell which side of the line you're on, it's worth getting advice rather than guessing.
When do I need to register as self-employed?
You need to register for Self Assessment as self-employed if, in a tax year, your gross trading income (your sales before you take off any expenses) was more than £1,000. The tax year runs from 6 April to 5 April.
You also need to register, even if you earned £1,000 or less, in a few specific situations. According to HMRC, these include where you want to:
- make voluntary Class 2 National Insurance contributions to protect your State Pension and benefits
- claim a trading loss for tax relief
- prove you're self-employed to claim certain benefits, such as Tax-Free Childcare or Maternity Allowance
So the headline test is the £1,000 trading allowance. Cross it, and registration becomes a legal duty rather than a choice.
What is the £1,000 trading allowance?
The trading allowance lets you earn up to £1,000 of gross trading income in a tax year tax-free, without having to tell HMRC or file a return. It covers casual and self-employed income such as freelancing, online selling, gardening or hiring out personal kit.
If your gross trading income is £1,000 or less for the year, you usually get full relief. You don't need to register and you don't declare it.
If it's more than £1,000, you have a choice each year. You can either:
- deduct the £1,000 allowance from your income instead of your actual expenses, or
- deduct your real business expenses in the normal way
You can't do both, so the allowance tends to suit people with very low costs. Either way, once you're over £1,000 you must register and report the income. The allowance changes how you're taxed, not whether you tell HMRC.
One thing that catches people out: the £1,000 test is on gross income, not profit. If you sold £4,000 of handmade goods but spent £3,500 on materials, your profit is only £500, but your gross income is £4,000, so you still need to register.
What is the deadline to register?
You must tell HMRC by 5 October following the end of the tax year in which you started trading or went over £1,000.
So if you became self-employed during the 2025/26 tax year (6 April 2025 to 5 April 2026), your deadline to register is 5 October 2026.
Here's how the key dates line up for that first year:
| What | When |
|---|---|
| Tax year you started trading | 6 April 2025 to 5 April 2026 |
| Deadline to register for Self Assessment | 5 October 2026 |
| Deadline to file a paper tax return | Midnight 31 October 2026 |
| Deadline to file online and pay any tax | Midnight 31 January 2027 |
Registering late isn't the end of the world if you still file and pay your tax on time, but it leaves no margin for error. HMRC needs to set you up and issue your Unique Taxpayer Reference (UTR) before you can file, and that takes time. Register early.
How do I register as self-employed?
Registering is free and done online through your HMRC account. The process is straightforward once you have your details to hand.
- Set up a Government Gateway account if you don't already have one, then sign in to register for Self Assessment as self-employed (a sole trader).
- Give HMRC your details: your National Insurance number, address, the date you started trading, and what your business does.
- Wait for your UTR. HMRC posts you a 10-digit Unique Taxpayer Reference. You need this to file, so allow plenty of time.
- Activate Self Assessment online. HMRC sends an activation code to finish setting up your online filing.
Once you're registered, HMRC will expect a tax return for each tax year you trade, until you tell them you've stopped.
If admin like this fills you with dread, our Self Assessment service handles registration, your return and your tax calculation so nothing slips. We also work with people just starting out through our pages for sole traders and startups.
How much tax will I pay as a sole trader?
As a sole trader you pay Income Tax and Class 4 National Insurance on your profits, not your turnover. For 2025/26 you can earn up to the Personal Allowance of £12,570 before any Income Tax is due.
Above that, the basic rate of Income Tax is 20%. Class 4 National Insurance is charged at 6% on profits between £12,570 and £50,270 for 2025/26, then 2% on profits above that.
Illustrative example
Sam is a self-employed graphic designer in their first full year. For 2025/26 their accounts show £18,000 of profit after expenses. Here's roughly what Sam owes:
| Calculation | Amount |
|---|---|
| Profit for the year | £18,000 |
| Less Personal Allowance | £12,570 |
| Taxable profit | £5,430 |
| Income Tax at 20% on £5,430 | £1,086.00 |
| Class 4 NIC at 6% on £5,430 | £325.80 |
| Total due | £1,411.80 |
Sam pays nothing on the first £12,570, then 20% Income Tax and 6% Class 4 NIC on the £5,430 above it. That comes to £1,411.80, due by 31 January 2027.
Sam's profit is also above the Small Profits Threshold of £6,845 for 2025/26, so their National Insurance record is treated as maintained without a separate Class 2 charge. Someone with profits below that threshold can pay Class 2 voluntarily at £3.50 a week for 2025/26 to protect their State Pension.
This is a simplified example with one income source. To sketch your own numbers, try our self-employed tax calculator.
What happens after I register?
Each year you'll complete a Self Assessment tax return reporting your income and expenses. The online filing deadline is 31 January after the tax year ends, and that's also when any tax is due.
A common surprise in your first year is payments on account. If your tax bill is over a certain amount, HMRC asks you to pay half of next year's expected bill on 31 January, and the other half on 31 July, on top of the tax you already owe. It's not extra tax, just paid earlier, but it can sting if you're not expecting it. Set money aside from day one.
Keep clear records of your income and expenses throughout the year. Good bookkeeping makes the return painless and means you only pay tax on your actual profit.
Want help registering as self-employed?
Getting set up correctly from the start saves stress at deadline time. Zmartly can register you with HMRC, handle your Self Assessment return and make sure you claim every expense you're entitled to. Book a free 20-minute call with a Zmartly accountant and start trading with confidence.
FAQs
Do I need to register if I earn less than £1,000?
Usually no. If your gross trading income for the tax year is £1,000 or less, the trading allowance covers it and you don't need to register or report it. You may still choose to register to pay voluntary National Insurance, claim a loss, or support a benefits claim.
What's the difference between a sole trader and self-employed?
They overlap. "Self-employed" describes how you work, while "sole trader" is the business structure most self-employed people use. A sole trader runs their business as an individual rather than through a limited company. You can be self-employed and a sole trader at the same time, which most people starting out are.
What happens if I register late?
HMRC can charge a penalty if you fail to notify them on time and tax goes unpaid as a result. Even if no penalty applies, registering late leaves little time to get your UTR and file before 31 January. The safest approach is to register as soon as you go over £1,000.
Do I need to register as self-employed if I have a full-time job too?
Yes, if your self-employed income goes over £1,000. Tax on your employment is handled through PAYE, but your self-employed profits are separate and reported through Self Assessment. The two are then taxed together based on your total income for the year.
How long does it take to get my UTR?
HMRC posts your Unique Taxpayer Reference after you register, and it can take a couple of weeks or longer to arrive. Because you can't file without it, register well before the 31 January filing deadline rather than leaving it to the last minute.
