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How to register as a sole trader or self-employed with HMRC - Full guide
When you’re on the outside looking in, being a sole trader seems like the perfect lifestyle. Imagine: flexible hours, higher income potential, independence. So, you take that step and join the ranks of the 4.8 million other Brits who serve no master.
But first you will have to register as self-employed with HMRC. And that’s when it hits you – you’re on your own.
The responsibilities begin to weigh down on you. You need to find work, decipher expenses, catalogue cash flow, and of course, file your own taxes. And what about job security, paid holiday, sick pay and…
Don’t worry - we’re here to help
You know the upsides of life as a sole trader, but now it’s time to understand the challenges. Registering as self-employed with HM Revenue and Customs (HMRC) is the first step.
When should I register as a sole trader?
Knowing when to register as self-employed with HMRC depends on what your business’s status is. It’s worth remembering that each person in the UK gets a £1,000 tax-free trading allowance, so if you don’t generate that much business income in a tax year, you don’t need to worry about sole trader HMRC registration.
However, the moment you begin generating income above the £1,000 threshold for yourself, HMRC considers you a sole trader. Your business’s active start date is either:
when you begin to market your business or
when you have goods or services to sell and a customer base.
Whichever happened first.
When this happens, make sure you register as self-employed with HMRC as soon as possible. Failure to do so within 3 months of starting your enterprise will earn you a £100 late fee. If you continue to delay, your penalty could swell to as much as £1,600.
Remember, some self-employed people decide to register as a limited company instead. If you’re not sure which is right for you, read our blog on the benefits of each route.
How do I register as a sole trader?
The easiest way to inform HMRC that you’re becoming a sole trader is to register online. There are a number of steps that you need to take in order to do this. These are:
Visit the HMRC website, and click on the button that says ‘register online’.
Login to your government gateway account with the automatically generated 12 digit number. You can then choose your own password.
Fill in the HMRC form once you have logged in and select the ‘Self Assessment’ option. Here, you’ll input your personal information and business status. You’ll also declare that everything you have said is true.
Once you have filled in everything you need, submit your application. HMRC will then get back to you within 10 days letting you know if you have been successful in registering as self-employed.
Enter the activation code that HMRC have sent to you with successful application confirmation into your government gateway account. Then, you should be free to begin paying taxes as a sole trader.
There’s also a newly self-employed helpline you can call to get further help. You can reach them on 0300 200 3504.
What information do I need?
When registering yourself as self-employed and a sole trader with HMRC, you’ll be asked to provide personal and business information such as:
National Insurance (NI) number
date of birth
name of your business
You’ll also be registering for their online services simultaneously - these allow you to send your tax forms online.
Registering as a sole trader with HMRC means that you’re registering for both Self Assessment tax returns and Class 2 National Insurance.
What are the benefits of registering as self employed?
There are many benefits to HMRC sole trader registration. For one, you’ll have the satisfaction of being officially registered as self-employed – plus you’ll avoid hefty fines.
Another benefit is that registering as self-employed with HMRC automatically sets up your online account, which you can view at any time. This lets you send tax returns online, check payment due dates, and register for other business taxes such as Value Added Tax (VAT).
HMRC will also give you a Unique Taxpayer Reference (UTR) number. This ten-digit number is used to get in touch with HMRC and access your Government Gateway account.
Are there any additional responsibilities for sole traders?
Yes. Tax-paying responsibilities for sole traders include paying your National Insurance Contributions (NICs) along with your Income Tax payment. There are two main types of NICs that you might have to pay – Class 2 and Class 4.
Class 2 NICs are compulsory, and due from the day your self-employment begins.
Paying into your Class 2 NICs counts towards benefits such as the basic state pension, employment and support allowance, and maternity allowance fund. Class 2 NICs are currently set at £3.45 a week.
You may be exempt from Class 2 NIC payments if:
you’re under 16 years old or at state pension age
you’re a married woman or widow with a Certificate of Reduced Rate Election
you have a Certificate of Small Earnings Exception if your earnings are below a certain amount, which varies year by year.
Class 4 NICs are based on your profits for the fiscal year. They are:
compulsory if your earnings are above a certain amount (currently £12,570)
not calculated on a flat rate, but based on a percentage of your taxable profits. This is changeable year by year
automatically calculated when paying online.
How can I make Self Assessment painless?
The key to an easier Self Assessment is keeping accurate records of your income and expenses. You can do this on paper, but digital record keeping is the more secure option.
The arrival of Making Tax Digital for income tax Self Assessment (ITSA) from April 2026 means that anyone registering as a sole trader or self-employed will need to keep digital records, so it makes sense to get into the habit of doing it now.
If you use accounting software like QuickBooks, you can manage everything in one place and start getting organised from day one.
The QuickBooks mobile app extracts the data from a photo of a receipt, uploading the details to your expenses. You can also use the mileage tracker to sort personal trips from business travel the easy way. When you send your invoices from QuickBooks all the information you need is already in the system, and if you connect your bank you’ll be able to see all your transactions in one place – you can even reconcile them automatically, ready for tax time.
For more information, visit Working For Yourself on gov.uk.
Feel you’re better informed about registering as a sole trader with HMRC? The QuickBooks Blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow - Discover the QuickBooks blog
Feel you’re better informed about registering as a sole trader with HMRC? The QuickBooks Blog covers a wide range of business-related topics – it’s all part of our mission to help small businesses grow.