How to register as self-employed in the UK
Whether you’re launching a freelance gig, starting a small business, or turning your passion project into a career, deciding to be your own boss can be a giant leap into the unknown.
But as with any big change, it can begin with just a small step – and registering as self-employed is the official start of your journey.
For many people, this means setting yourself up as a sole trader, the simplest way to operate as a self-employed individual.
Don’t worry, it’s not as intimidating as it sounds. Here’s a step-by-step guide to walk you through the process.
What counts as being ‘self-employed’?
HMRC says you’re likely to be self-employed if you run a business for yourself and are responsible for its success or failure.
If you are self-employed, you will not be paid via PAYE and won’t have the same rights, such as statutory sick pay or maternity leave, as employees have.
Self-employed workers will sell items or services to make a profit or earn commission from selling goods to others.
You are probably self-employed if most of the following are true:
- Put in bids or give quotes to get work
- Are not under direct supervision when working
- Submit invoices
- Are responsible for your own tax and national insurance
- Don’t get holiday or sick pay
- Operate under a contract
The key factor is intention and regularity. If you’re working to make money and not just as a one-off hobby or personal sale, you’re likely self-employed.
Is being self-employed the same as being a sole trader?
Not exactly, but they’re closely related. ‘Self-employed’ is a general term that describes anyone who works for themselves and is not employed by a company under a contract. Sole trader is a specific legal structure within self-employment.
When you register as a sole trader, you and your business are legally the same entity. This means you’re personally responsible for all debts and taxes.
While that can sound daunting, it is actually the simplest and most common way to operate if you are self-employed in the UK.
When do I need to register as self-employed?
Registration with HMRC is necessary if you earn more than £1,000 for self-employment, including any side hustles, in a tax year (April 5 to April 6). You need to be registered to claim any expenses or pay national insurance.
Legally, you need to register before October 5 in your business’s second tax year. However, the sooner you do it, the less likely you are to encounter any unexpected tax headaches.
It is generally recommended that you register as self-employed as soon as you start working for yourself.
How do I register as self-employed?
Registering
through gov.uk is pretty straightforward. You’ll just need a few details, including basic personal information like your national insurance number, the date you started your business, and details about the type of work you do.
You’ll need to make sure you’re registering for self-assessment and national insurance. How much – and what class - national insurance you pay will depend on your profits, so you should check the gov.uk website to see what to expect.
Once you’ve registered, HMRC will send you a Unique Taxpayer Reference (UTR) number in the post within 10 working days. This number is your identifier for filing taxes and dealing with HMRC.
You’ll get a letter or email (and probably a text) from HMRC reminding you to complete your self-assessment tax return before the due date.
What are my responsibilities as a sole trader?
As a sole trader, you’re your own boss - but with great freedom comes great responsibility.
Here’s what you need to stay on top of:
1. Filing an annual self-assessment tax return
Each year, you’ll need to complete and submit a tax return to HMRC, detailing your earnings and expenses. The deadline for filing online is January 31.
This be done online and after filling in your self-assessment, you’ll be told how much tax and NICs you need to pay.
2. Pay your tax and national insurance contributions (NICs)
You’ll need to pay:
- Income tax on your profits (based on thresholds).
- Class 2 NICs (a flat rate for self-employed individuals).
- Class 4 NICs (based on your profits if they exceed the threshold).
3. Keep accurate records
It’s crucial to keep track of:
- Income (invoices, sales records).
- Expenses (receipts, bills, business-related costs).
You’re required to hold onto these records for at least five years after the submission deadline of each tax return.
4. Register for VAT (if applicable)
If your turnover exceeds the VAT threshold (currently £90,000), you’ll need to register for VAT. You can also register voluntarily if it benefits your business.
5. Take care of insurance
While not always mandatory, certain types of insurance - like
public liability insurance or
professional indemnity insurance - can protect your business and give you peace of mind.
