How to register as self-employed in the UK: step-by-step for tradespeople
You have decided to go out on your own. Maybe you have been working for someone else as an employed plumber, electrician, or carpenter and you want more control over your work and your earnings. Maybe you are picking up side jobs on weekends and the money is getting serious enough to make it official. Either way, you need to register as self-employed with HMRC. The process is straightforward, but the consequences of getting it wrong are not. Miss the deadline and you face a £100 penalty before you have even filed your first return.
Quick answer
Register with HMRC for Self Assessment by 5 October after the end of the tax year in which you started trading. You can register online through your Government Gateway account at gov.uk. You do not need to form a limited company. As a sole trader, you can start trading immediately and register afterwards, but do not miss the deadline.
When you must register
You must register for Self Assessment by 5 October following the end of the tax year in which you started self-employment. The UK tax year runs from 6 April to 5 April.
So if you take on your first self-employed job on 15 September 2025, that falls in the 2025/26 tax year (6 April 2025 to 5 April 2026). You must register by 5 October 2026. In practice, register as soon as you start trading. There is no advantage to waiting, and you avoid the risk of missing the deadline.
The £1,000 trading allowance
If your total self-employment income is under £1,000 in a tax year, you do not need to register for Self Assessment. This is the trading allowance. It covers genuine micro-trading, the odd weekend job, selling a few items on eBay.
For tradespeople, this threshold gets crossed quickly. One decent bathroom job and you are past it. Do not rely on the trading allowance if you are planning to trade regularly. Register properly.
How to register: step by step
Registration happens online through HMRC's website. Here is the process:
Registration steps
- Create a Government Gateway account if you do not already have one. You need an email address, and HMRC will post you an activation code (takes 7-10 working days).
- Register for Self Assessment as a sole trader. You will be asked when you started trading, what your business does, and your personal details.
- Wait for your UTR. HMRC will send you a Unique Taxpayer Reference number within 10 working days. You need this for your tax returns and some customers will ask for it.
- Set up your online account. Once you have your UTR, you can log into your HMRC online account, view deadlines, and submit returns.
The whole registration takes about 15 minutes online, plus the wait for postal codes and your UTR. Start the process early so everything is set up before you need to file anything.
Sole trader vs limited company
Most tradespeople start as sole traders. It is simpler, cheaper, and perfectly adequate for a one-person trade business. Here is the honest comparison:
| Factor | Sole trader | Limited company |
|---|---|---|
| Setup cost | Free | £12-50 (Companies House) |
| Accounting | Simple records, one tax return | Annual accounts, corporation tax return, payroll |
| Accountant fees | £200-500/year | £800-2,000/year |
| Personal liability | Unlimited | Limited to company assets |
| Tax efficiency (profit under £30k) | Similar | Marginal benefit, eaten by admin costs |
| Tax efficiency (profit over £50k) | Higher tax rate | Can be more efficient via salary + dividends |
| Admin burden | Low | High (Companies House filings, payroll, etc.) |
My honest advice: stay as a sole trader until your profits consistently exceed £40,000-50,000 per year. Below that, the tax savings of a limited company are wiped out by the extra accountancy costs and admin. Above that threshold, talk to an accountant about whether incorporating makes sense for your specific situation.
Read more about the differences on gov.uk's working for yourself guide.
Tax and National Insurance: what you will pay
As a self-employed sole trader, you pay Income Tax on your profits (income minus allowable expenses) and Class 4 National Insurance.
Income Tax rates 2025/26
| Band | Taxable income | Rate |
|---|---|---|
| Personal allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
National Insurance
From April 2024, compulsory Class 2 NICs were abolished for self-employed people. You can still pay them voluntarily to build your State Pension record, but they are no longer mandatory.
Class 4 NICs remain:
- 6% on profits between £12,570 and £50,270
- 2% on profits above £50,270
So if you are a self-employed electrician with profits of £35,000, your Class 4 NIC bill is 6% of (£35,000 - £12,570) = 6% of £22,430 = £1,345.80.
What records to keep from day one
Start keeping records the day you start trading, not the day you register. HMRC can ask to see your records at any time, and "I had not registered yet" is not an excuse for having no records.
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At minimum, keep:
- All sales invoices. Every job you do, invoiced with date, customer, and amount. Use our free invoice generator so every invoice is stored digitally from the start.
- All purchase receipts. Materials, tools, fuel, insurance, phone bills, anything you buy for the business.
- Bank statements showing money in and money out. A separate business bank account makes this much easier.
- Mileage log, if you claim vehicle expenses using the simplified mileage method (45p per mile for the first 10,000 miles, 25p after).
You must keep records for at least 5 years after the 31 January submission deadline. For the 2025/26 tax year, that means keeping records until at least 31 January 2032.
Common allowable expenses for tradespeople
These are the expenses you can deduct from your income before calculating tax:
- Materials and supplies used on jobs
- Tools and equipment (or capital allowances for expensive items)
- Vehicle costs (actual costs method or simplified mileage rate)
- Insurance (public liability, professional indemnity, van insurance)
- Phone and internet costs (business portion)
- Workwear and protective clothing (not ordinary clothes)
- Training courses related to your existing trade
- Accountancy fees
- Software and subscriptions used for the business
- Trade body membership (such as NICEIC, Gas Safe registration fees)
The important phrase is "wholly and exclusively for business purposes." If an expense is partly personal, you can only claim the business portion. Your phone bill is £60/month and you use it 70% for business? You can claim £42/month.
Deadlines to know
| Deadline | What |
|---|---|
| 5 October | Register for Self Assessment (after end of first trading tax year) |
| 31 October | Paper tax return deadline (if you still file on paper) |
| 31 January | Online tax return deadline + first tax payment |
| 31 July | Second payment on account |
Payments on account are advance payments towards next year's tax bill. HMRC calculates them as 50% of your previous year's tax. So if your 2025/26 tax bill is £4,000, you pay £4,000 by 31 January 2027, plus a £2,000 payment on account for 2026/27. Then another £2,000 on 31 July 2027. This trips up a lot of first-year sole traders who do not expect the January payment to include next year's advance.
CIS: if you work in construction
If you are a self-employed subcontractor in the construction industry, you also need to register for the Construction Industry Scheme (CIS). Under CIS, contractors deduct 20% from your payments (or 30% if you are not registered) and pass it to HMRC as advance tax payments.
CIS deductions are not extra tax. They are tax you already owe, just paid earlier. You reclaim any overpayment through your Self Assessment return. Use our CIS calculator to check your deductions are correct.
Frequently asked questions
How long does it take to register as self-employed?
The online registration takes about 15 minutes. However, HMRC will post you activation codes and your UTR, which takes 10-14 working days in total. Start the process as soon as you begin trading.
Can I be employed and self-employed at the same time?
Yes. Many tradespeople work for an employer during the week and take on private jobs at evenings and weekends. You pay Income Tax on both your employment and self-employment income, but your personal allowance is typically applied to your employment income through PAYE. Your self-employment profits go on your Self Assessment return.
Do I need a business bank account?
There is no legal requirement for sole traders to have a separate business bank account. But it makes your life dramatically easier. Mixing personal and business transactions in one account makes record keeping a nightmare and increases the chances of errors on your tax return. Most basic business accounts are free.
What happens if I do not register on time?
If you miss the 5 October deadline, HMRC can charge a late registration penalty. More practically, late registration means your Self Assessment return is also likely to be late, which carries its own penalties: £100 for up to 3 months late, then escalating charges. Register early and avoid the hassle entirely.
Registering as self-employed is the easy part. Running the business profitably is the real work. Start on the right foot with proper invoicing from day one. InvoiceAdept is free for sole traders, with professional invoices, automatic reminders, and digital records that keep you ready for Self Assessment and Making Tax Digital.
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