How to Register as a Sole Trader in the UK (2026)

Last updated: October 2026.

A sole trader is the simplest business structure to set up and keep records for. You work for yourself and you are personally responsible for all the debts of the business. This guide covers who needs to register, the deadline, the steps, the UTR, National Insurance for 2026/27, business names, bank accounts, records and Making Tax Digital for Income Tax.

Do I need to register as a sole trader?

Not always. You can start trading straight away without registering. GOV.UK says you must register for Self Assessment as a sole trader if you earn more than £1,000 in a tax year, which runs from 6 April to 5 April. You can choose to register earlier.

The £1,000 figure is your gross trading income, which means the total you would put on your tax return before expenses. It is covered by the trading allowance, a tax exemption of up to £1,000 a year for income from self-employment, casual services such as gardening or babysitting, and hiring out personal equipment.

When your gross income is over £1,000, you can use the allowance instead of deducting your actual expenses. You deduct up to £1,000, but never more than your income. GOV.UK says that if your expenses are more than your income, it may be better to claim expenses. You cannot claim both.

You cannot use the trading allowance on income from a company you or someone connected to you owns or controls. The same applies to income from a partnership where you or someone connected to you is a partner, and to income from your employer or your spouse's employer.

What is the deadline to register as a sole trader?

You must tell HMRC by 5 October after the end of the tax year in which you started trading. GOV.UK gives the rule for anyone who has not sent a tax return before.

Your first return follows the same tax year. For 2026 to 2027 the online return and the tax are both due by 31 January 2028.

If you started between 6 April 2025 and 5 April 2026 and have not registered, the 5 October 2026 deadline has passed. Register now. GOV.UK says that if you register after 5 October 2026, HMRC will send a letter or email with a different filing deadline, set at 3 months from the date of the letter. You must still pay the tax you owe by 31 January 2027, and you could get a penalty.

Do not wait for 5 October. You cannot start your return until you have a UTR, and the first January deadline arrives quickly.

How do I register as a sole trader step by step?

You register as a sole trader by registering for Self Assessment. Here are the steps.

1. Find your National Insurance number. GOV.UK says you need one to register. If you do not have one, apply for it first.
2. Sign in to your Personal Tax Account. HMRC's registration service for people new to Self Assessment runs through this account. You can create the account with Government Gateway or GOV.UK One Login details.
3. Start the registration on GOV.UK. Use the Register for Self Assessment tool and choose the option for sole traders. How you register depends on your circumstances.
4. Tell HMRC about your business. Have your trading start date to hand, because it sets your deadline.
5. Wait for your UTR. HMRC issues a Unique Taxpayer Reference. HMRC says people using the improved service receive it in their online account within 72 hours, instead of waiting up to 15 days for it to arrive by post.
6. Start keeping records from day one. You cannot reconstruct a year of invoices easily in the January you file.
7. File a return every year. The online deadline is 31 January after the tax year ends.

If you have already registered for Self Assessment for another reason, such as employment income, GOV.UK says you must register again as a sole trader. That registers you for Class 2 National Insurance, which helps you qualify for benefits like the State Pension.

If you registered before but did not need to send a return for 2024 to 2025, you may need to reactivate your account. You do this within the registration service.

If you use an agent, they register you with different forms. The online service is for individuals.

What is a UTR and where do I find it?

A UTR is a Unique Taxpayer Reference. It is a 10-digit number that HMRC uses to identify you for Self Assessment. It is sometimes just called your tax reference.

GOV.UK says you usually receive your UTR by post around 15 days after you register, and longer if you live overseas. You can find it later in your Personal Tax Account, in the HMRC app, and on documents from HMRC such as a notice to file a return or a payment reminder. If you cannot find it, contact HMRC.

How much National Insurance does a sole trader pay in 2026/27?

You work out your profit first. Profit is your self-employed income minus your allowable expenses. Then you pay Class 4 National Insurance on profit above a threshold. Class 2 is treated as paid once your profit reaches £7,105. The figures come from GOV.UK.

Voluntary Class 2 at £3.65 a week comes to £189.80 over 52 weeks. It is worth thinking about if your profit is low and you want to build your State Pension record. To pay it you must register.

Most people pay Class 2 and Class 4 through Self Assessment, so there is no separate bill.

How much tax will I pay as a sole trader?

You pay Income Tax on your profit above your Personal Allowance, plus Class 4 National Insurance. The 2026/27 rates for England, Wales and Northern Ireland, per GOV.UK, are:

Your Personal Allowance falls by £1 for every £2 of adjusted net income above £100,000. Scotland has different Income Tax bands.

Worked example: £35,000 of profit

Say you are a sole trader in England with £35,000 profit for 2026/27 and no other income.

That is the bill for the year. Each payment on account is half of the previous year's tax. GOV.UK says payments on account are due on 31 January and 31 July, and they include Class 4. You make them unless last year's bill was under £1,000, or you paid more than 80% of it outside Self Assessment.

So your first January bill can be much bigger than you expect. With this example and nothing taken at source, the balancing payment for 2026/27 is £5,831.80 on 31 January 2028. The first payment on account for 2027/28 is half of that, £2,915.90, due the same day. The second, £2,915.90, follows on 31 July 2028. Set money aside as you earn it.

Can I use a business name?

Yes. You can trade under your own name or choose another name. GOV.UK sets three limits. A sole trader name must not:

• include "limited", "Ltd", "limited liability partnership", "LLP", "public limited company" or "plc"
• be offensive
• be too similar to another company's trademarked name, because you may have to change it if someone complains

You must include your name, and your business name if you have one, on official paperwork such as invoices and letters. If you use a business name, your invoices must also show an address where legal documents can be delivered to you. Our guide to what a UK invoice must include lists the full set.

Do I need a business bank account?

Not by law. A limited company must keep its banking separate from its owners. A sole trader has no such rule. HMRC says you might be able to use a personal or business bank account for your business, and you should check with your bank which type it allows for business transactions.

A separate account still makes life easier. Every transaction in it is a business transaction, so your records are cleaner and your return is quicker. Banks set their own terms for personal accounts used for trading, so ask yours before you start.

What records must a sole trader keep?

You must keep records of your business income and expenses for your Self Assessment return. GOV.UK says you need to record:

• all sales and income
• all business expenses
• VAT records, if you are VAT-registered
• PAYE records, if you employ people
• records of your personal income

Keep proof such as receipts, bank statements, sales invoices and till rolls. You do not send records in with your return. You keep them to work out profit and to show HMRC if asked.

From the 2024 to 2025 tax year, cash basis is the default accounting method. You record income and expenses when money moves, not when you invoice or are billed. You must opt out if you want traditional accounting or cannot use cash basis.

You must keep records for at least 5 years after the 31 January submission deadline of the tax year. For a 2026 to 2027 return filed by 31 January 2028, that means keeping them until at least the end of January 2033.

Our guides to allowable business expenses and how to do a Self Assessment tax return cover what you can claim and how to file.

Do I need Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax, or MTD for Income Tax, replaces one annual return with digital records and quarterly updates. Whether you need it depends on your qualifying income. GOV.UK says you need it if you are a sole trader or landlord registered for Self Assessment, with self-employment or property income, and your qualifying income is above the threshold for the tax year.

Qualifying income is your total income from self-employment and property before expenses, in other words turnover. It is based on the tax return you submitted for the previous year.

If you start trading this year and your qualifying income for 2026 to 2027 is over £20,000, you will need MTD from 6 April 2028. You can also sign up voluntarily before you have to. HMRC began signing up people who need it for 2026 to 2027, and have not signed up themselves, from September 2026.

Once you are in MTD, you:

1. Keep digital records of income and expenses in compatible software. You must also keep your original receipts and invoices.
2. Send a quarterly update to HMRC every 3 months. These are summaries of your income and expenses for the tax year so far, not tax returns.
3. Complete and submit your tax return using your software by 31 January after the tax year.

The quarterly update deadlines are the same for everyone using standard update periods:

HMRC will not apply penalty points for late quarterly updates in the 2026 to 2027 tax year. After that, each missed deadline earns a point, and 4 points bring a £200 penalty. Penalties still apply for late tax returns and for tax paid late.

If you are under the thresholds for now, you stay in ordinary Self Assessment. Our guide to Making Tax Digital for Income Tax explains the service in full.

Do I need to register for VAT as a sole trader?

Only when your taxable turnover passes the threshold. GOV.UK says you must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days. You can register voluntarily below that.

VAT registration is separate from registering as a sole trader. It uses a different HMRC service.

What should I do first?

Do these in order:

1. Check whether your gross trading income is over £1,000 or another reason applies.
2. Register for Self Assessment as a sole trader and note your deadline.
3. Choose your business name and check it follows GOV.UK's rules.
4. Decide whether to open a separate business bank account.
5. Set up a system for records on your first day.
6. Check whether MTD for Income Tax will apply to you, and when.

How AccountsOS helps

AccountsOS keeps your income, expenses and invoices in one place and builds your Self Assessment figures as you go, so your profit and tax estimate are ready when you need them. Today the return itself goes in through HMRC's own service or other software. To see whether a limited company would suit you better as your profit grows, try the sole trader vs limited company calculator.

Frequently asked questions

How do I register as a sole trader in the UK?

Register for Self Assessment with HMRC through your Personal Tax Account on GOV.UK. You need a National Insurance number. HMRC then issues a UTR, which people using the improved service receive in their online account within 72 hours.

What is the deadline to register as a sole trader?

5 October after the end of the tax year in which you started. If you started in June 2026, you register by 5 October 2027. If you register late, HMRC sets a later filing deadline, but you still have to pay by 31 January and you could get a penalty.

Do I have to register if I earn under £1,000?

Not normally. If your gross trading income is £1,000 or less in the tax year, you may not have to tell HMRC. You should still register if you want to pay voluntary Class 2 National Insurance, claim Tax-Free Childcare or Maternity Allowance based on self-employment, or claim loss relief.

Can I start trading before I register?

Yes. GOV.UK says you can start trading straight away without registering. You must register by 5 October after the end of the tax year you start in, if your income is over £1,000.

How much National Insurance does a sole trader pay in 2026/27?

You pay Class 4 at 6% on profit between £12,570 and £50,270, and 2% above £50,270. Class 2 is treated as paid if your profit is £7,105 or more. Below £7,105 you can choose to pay Class 2 at £3.65 a week.

Do sole traders need a business bank account?

No. HMRC says you might be able to use a personal or business account for business transactions. Check your bank's terms. A separate account keeps your records cleaner.

Can I call my business anything I like?

Almost. You can trade under your own name or another name, but it must not include "Ltd", "limited", "LLP" or "plc", must not be offensive, and must not be too similar to a trademarked name.

Does Making Tax Digital for Income Tax apply to me?

It does if your qualifying income, which is your turnover from self-employment and property, is over £50,000 for 2024 to 2025, £30,000 for 2025 to 2026 or £20,000 for 2026 to 2027. Those set start dates of 6 April 2026, 2027 and 2028.

Sources

• GOV.UK: Become a sole trader
• GOV.UK: Check how to register for Self Assessment
• GOV.UK: Self Assessment tax returns, deadlines
• GOV.UK: Tax-free allowances on property and trading income
• GOV.UK: Self-employed National Insurance rates
• GOV.UK: Income Tax rates and Personal Allowances
• GOV.UK: Understand your Self Assessment tax bill
• GOV.UK: Find your UTR number
• GOV.UK: Improved Self Assessment registration service launched
• GOV.UK: Business records if you are self-employed
• GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
• GOV.UK: Sign up for Making Tax Digital for Income Tax
• GOV.UK: Use Making Tax Digital for Income Tax, send quarterly updates
• GOV.UK: Register for VAT

This guide is general information, not tax advice. Check your own position with an accountant or HMRC.