Self Assessment: a starting map for sole traders

The short answer

You register as a sole trader by registering for Self Assessment with HMRC. You do not incorporate at Companies House.

HMRC says you must register as a sole trader if your gross trading income is more than £1,000 in a tax year. Other reasons can also require registration, including proving that you are self-employed, making voluntary Class 2 National Insurance payments, registering for CIS or working as a share fisher. Use the live official check for your circumstances.

Before you start

Have these ready:

• your National Insurance number;
• the date you started trading;
• your main business activity and trading name, if you use one;
• a secure place outside My Business Path for HMRC references and sign-in details.

Do not wait for registration before keeping records. Start with the first sale or cost.

Register step by step

1. Open Register as a sole trader on GOV.UK and check whether registration is required.
2. Choose Start now. HMRC will route you according to whether you have used Self Assessment before.
3. Sign in or create the sign-in details requested by HMRC. Follow the questions for self-employment rather than starting a Companies House application.
4. Check the submission, send it and save the confirmation securely.
5. Wait for the Unique Taxpayer Reference (UTR) and HMRC instructions. If you have registered before, the official service may instead explain how to reactivate your account.
6. Record registration submitted or registration complete in your roadmap. Do not put the UTR, National Insurance number or password in roadmap notes.

HMRC normally needs to be told by 5 October after the tax year for which you first need a return. The live HMRC page gives the exact date for the current filing cycle and explains penalties for late notification.

What to do immediately afterwards

• Keep sales, expenses, invoices, receipts, bank evidence and business mileage where relevant.
• Choose an accounting method and a bookkeeping routine you can reconcile.
• Estimate Income Tax and National Insurance and move a sensible amount into a separate tax pot.
• Add the Self Assessment return and payment date to the roadmap, with an earlier personal preparation date.
• Check Making Tax Digital for Income Tax using gross qualifying self-employment and property income, not profit.
• Check VAT separately. A sole trader can be VAT-registered even though no company exists.

What complete looks like

You know why registration is or is not required, the official action has been completed when needed, the confirmation and UTR are stored securely, records run from the correct start date and the next tax date is in the plan.

Get help if

Ask an accountant or tax adviser about mixed income, losses, property, overseas work, CIS, VAT, employees, uncertain employment status or a missed registration date.