Self-employed in the UK: how to register as a sole trader, expenses and NI

In short

• This guide covers self-employment as a sole trader. You can start straight away without registering, but you must register for Self Assessment once you earn more than £1,000 in a tax year from 6 April to 5 April (as of November 2026, GOV.UK).
• Registering gives you a UTR, a 10-digit number that usually arrives by post after about 15 days.
• You pay tax on your profit, which is your income minus allowable expenses. Instead of expenses you can use the £1,000 trading allowance, but not both at once.
• National Insurance in 2026/27: Class 4 is 6% of profits between £12,570 and £50,270 and 2% above that. If your profits are £7,105 a year or more, Class 2 is treated as paid.
• Keep your records of income and expenses for at least 5 years after the 31 January deadline.

Self-employed or an employee: how to tell

A self-employed person runs their own business and takes responsibility for its success or failure. They are not paid through PAYE, they do not have the rights and responsibilities of an employee, and employment law does not cover them in most cases (GOV.UK). Employee rights are covered in the guide Employment rights in the UK: what you're entitled to.

GOV.UK lists the following among the indicators of self-employment:

• they put in bids or give quotes to get work,
• they are not under direct supervision when working,
• they submit invoices for the work they have done,
• they do not get holiday or sick pay when they are not working.

HMRC may regard someone as self-employed for tax purposes even if they have a different status in employment law. You can check your status for tax purposes online with an HMRC tool. If your status is wrong, you may have to pay unpaid tax and penalties, or lose entitlement to benefits.

If you are not sure whether you are already trading, ask HMRC (GOV.UK).

The construction industry has its own scheme, CIS, described in the guide CIS in construction: tax, registration and refunds.

How to register as self-employed step by step

Registering as a sole trader means registering for Self Assessment (as of November 2026, GOV.UK). You can start trading straight away, but you must register once you earn more than £1,000 in a tax year.

1. Choose a business name, if you have one. It cannot include the words ‘limited’, ‘Ltd’, ‘LLP’ or ‘plc’. On invoices and letters you give your own name and your business name.
2. Have your National Insurance number ready: you need it to register for Self Assessment.
3. Register for Self Assessment as a sole trader. If you are already registered for Self Assessment for another reason, you must register again as a sole trader.
4. Meet the deadline. The general rule: if your gross income is more than £1,000, you register by 5 October in the following tax year (GOV.UK). For the previous tax year (6 April 2025 to 5 April 2026) the deadline is 5 October 2026 if you need to complete a tax return and have not filed one before, or did not need to for 2024/25 (GOV.UK). Telling HMRC after that date could result in a penalty.
5. Collect your UTR. It usually arrives by post around 15 days after you register, and takes longer if you live overseas (GOV.UK). You can also find it in your Personal Tax Account and in the HMRC app.

If your income is £1,000 or less, you still need to register if you want to claim relief for a loss or claim Maternity Allowance based on your self-employment. You also need to register if you must prove you are self-employed (for example, to claim Tax-Free Childcare) or want to make voluntary Class 2 payments.

For filing and payment deadlines, see the income tax guide; for completing the return, see Self Assessment step by step.

You may already need to use Making Tax Digital for Income Tax. See Income tax in the UK: tax codes, PAYE and Self Assessment for dates, thresholds and rules.

Self-employed expenses: what you can deduct

Your profit is your self-employed income minus your expenses. You deduct allowable expenses from your income before working out Income Tax (GOV.UK, as of November 2026).

You can claim, among other things:

• office costs, for example stationery and phone bills,
• travel: fuel, parking, train or bus fares,
• things you buy to sell on, such as stock or raw materials,
• financial costs, for example insurance and bank charges,
• advertising or marketing, for example website costs,
• training courses related to your business,
• protective clothing, such as safety boots and hard hats.

You cannot claim for everyday clothing (suits, shirts, dresses or ordinary shoes), even if you wear it for work. You also cannot claim for travel between home and work, fines or penalty charges, the cost of preparing and submitting your Self Assessment return, gym membership fees, or money taken from your business for personal use.

If you use something for both business and personal reasons, you can only claim the business part. If your mobile phone bills for the year total £200 and £70 of that is business calls, you claim £70. If you work from home, you need to divide your costs using a reasonable method, for example by the number of rooms you use for business or the time you spend working from home.

You report your expenses on your Self Assessment return. You do not send in proof with your return, but you should keep it in case HMRC asks.

Simplified expenses

Simplified expenses are flat rates you use instead of working out your actual costs. They are optional, and limited companies and partnerships involving a limited company cannot use them. The flat rates cover vehicles, working from home and living at your business premises; you work out all other expenses from your actual costs (GOV.UK, as of November 2026). Rates for 2026/27:

You can claim other travel expenses and parking on top of your vehicle expenses. You cannot use simplified expenses for a vehicle you have already claimed capital allowances for, or included as an expense when working out your business profits. Once you use the flat rate for a vehicle, you must keep using it for as long as you use that vehicle for your business. The flat rate for working from home applies only if you work 25 hours or more a month from home, and it does not include phone or internet costs.

Cash basis and record keeping

The standard accounting method for a sole trader is cash basis (as of November 2026, GOV.UK): you record income or expenses when you receive money or pay a bill. From the 2024/25 tax year it is the default method, and you must opt out if you want to use traditional accounting (where you record income and expenses by the date you invoiced or were billed). Under cash basis you claim the cost of equipment (other than cars) as a normal allowable expense rather than a capital allowance.

If you are a sole trader or a partner in a partnership, you must keep records of your business income and expenses (GOV.UK). Record all your sales and income and all your business expenses.

Keep your records for at least 5 years after the 31 January submission deadline of the relevant tax year. If you cannot replace lost records, do your best to provide figures. Tell HMRC when you file your tax return if you use estimated figures. HMRC can charge a penalty if the records you keep are not accurate and complete, or if you do not keep them for the required period (GOV.UK).

Trading allowance: £1,000 instead of expenses

The trading allowance is a tax exemption of up to £1,000 a year for trading income in 2026/27 (GOV.UK, as of November 2026). It also covers casual services, for example babysitting or gardening.

• If your gross income is more than £1,000, you can deduct £1,000 instead of your expenses, but not more than your income (this is known as partial relief).
• If you use the trading allowance, you cannot claim expenses. If your expenses are more than your income, it may be better to claim expenses instead of the allowance.
• The allowance does not apply to trading income from a partnership.
• You cannot use the trading allowance in a tax year if you receive any trading income from your employer or your spouse's or civil partner's employer.
• You must still keep a record of your income.

National Insurance for the self-employed

Rates for 2026/27 (as of November 2026, GOV.UK):

Most people pay Class 2 and Class 4 through Self Assessment. A self-employed person with a gross income over £1,000 but profits of less than £7,105 can pay voluntary Class 2 or Class 3. Class 3 in 2026/27 is £18.40 a week (GOV.UK). To get a State Pension you usually need at least 10 qualifying years. You can read more about pensions in the guide Pensions in the UK and Poland.

What changes from April 2027

The following changes from 6 April 2027 were announced in Autumn Budget 2026 and HMRC guidance (as of November 2026). The trading allowance increase requires legislation, to be introduced in Finance Bill 2026-27 (GOV.UK).

• Trading allowance. The government has announced that the trading allowance will rise from £1,000 to £3,000 from 6 April 2027 (GOV.UK). The trading income reporting threshold for Self Assessment is also due to rise to £3,000.
• National Insurance in 2027/28. The Class 2 Small Profits Threshold is due to be £7,355 a year, voluntary Class 2 £3.80 a week and Class 3 £19.05 a week. The remaining National Insurance limits and thresholds are to stay at 2026/27 levels until the 2030/31 tax year (as of November 2026, GOV.UK).
• Mileage rate. From 6 April 2027 the rate for business mileage above 10,000 miles is due to rise from 25p to 35p (GOV.UK). The 55p rate for the first 10,000 miles is to become permanent (GOV.UK).

Scotland and Wales

Income Tax bands are different in Scotland. You pay Scottish Income Tax if you live in Scotland. If you fill in an online Self Assessment return, there is a box where you tell HMRC that you pay Scottish Income Tax (GOV.UK, as of November 2026). In Wales, Income Tax rates are set by the Welsh Government (GOV.UK).

Frequently asked questions

Can I be self-employed and have a job?

Yes. You can be a sole trader as your only job or be employed and self-employed at the same time. However, you cannot use the trading allowance in a tax year if you receive any trading income from your employer or your spouse's or civil partner's employer (as of November 2026, GOV.UK).

Is it better to use the trading allowance or claim expenses?

You cannot do both: if you use the £1,000 trading allowance, you cannot claim expenses (as of November 2026, GOV.UK). If your expenses are more than your income, it may be better to claim expenses instead of the allowance. If you are unsure, ask HMRC (details in the section ‘Where to get help’).

What happens if I register late?

If you register late, or do not register when you need to, you may get a penalty. For 2025/26 the deadline was 5 October 2026 (as of November 2026, GOV.UK). The sources we use do not give the amount of the penalty for late registration. Penalties for late returns are covered in the income tax guide linked above.

Where to get help

• HMRC Self Assessment helpline: 0300 200 3310, Monday to Friday, 8am to 6pm, closed on bank holidays. From outside the UK: +44 161 931 9070 (GOV.UK).
• Online: the HMRC digital assistant can help with, among other things, registering for Self Assessment (same page).
• By post: HM Revenue and Customs, BX9 1AS.

This guide is general information and not tax advice. Check amounts and thresholds on GOV.UK.