Deciding to start your own business is an exciting step. If you have chosen to operate as a sole trader, you are choosing the simplest and most common business structure in the UK. However, there are still some important legal and tax responsibilities you need to be aware of. The very first of these is registering with HM Revenue & Customs (HMRC).
For many new business owners, this can feel like a daunting first hurdle. The good news is that the process is usually very straightforward. This guide is written to calmly walk you through the steps of registering as a sole trader.
When Do You Need to Register?
Before we look at how to register, it is important to know when you need to do so. You do not need to register as a sole trader if your total income from self-employment in a tax year is £1,000 or less. This is known as the trading allowance.
If you earn more than £1,000 from your self-employed activities, you must register with HMRC. The deadline for registering is 5th October in your business’s second tax year. For example, if you start your business in July 2025 (which is in the 2025/26 tax year), you must register with HMRC by 5th October 2026.
However, it is always best practice to register as soon as you know you will be trading and expect to earn more than the trading allowance. There is no benefit to waiting until the deadline.
How to Register as a Sole Trader
Registering as a sole trader is also known as “registering for Self-Assessment.” You can do it easily online through the GOV.UK website.
Step 1: Go to the GOV.UK website
Search for “register for Self-Assessment” on the GOV.UK website. This will take you to the correct online service.
Step 2: Create a Government Gateway account (if you don’t have one)
To use most of HMRC’s online services, you need a Government Gateway user ID and password. If you have never filed a tax return online before, you will likely need to create a new account. This is a simple process that involves providing some personal details.
Step 3: Complete the online registration form
Once you are logged in, you will need to complete the registration form. You will be asked for some basic information, including:
- Your name, date of birth, and National Insurance number.
- Your contact details.
- The date you started your business.
- The name and nature of your business.
Step 4: Receive your Unique Taxpayer Reference (UTR)
Once you have submitted your registration, HMRC will create a Self-Assessment record for you and send you a Unique Taxpayer Reference (UTR) number in the post. This is a 10-digit number that you will need for all your future dealings with HMRC regarding your self-employed tax. It can take a few weeks to arrive, so it is important to keep it safe.
What Happens Next?
Once you are registered, you are officially in the Self-Assessment system. This means you will need to:
- Keep accurate records of all your business income and expenses.
- File a Self-Assessment tax return each year.
- Pay any Income Tax and National Insurance you owe by the deadline.
As of April 2026, if your self-employed income is over £50,000, you need to follow the rules for Making Tax Digital for Income Tax, which involves keeping digital records and sending quarterly updates to HMRC. From April 2027, the threshold to register is dropping from £50,000 > £30,000.
When Getting Advice Can Help
Registering as a sole trader is the first step on your business journey. While the process is straightforward, ensuring you meet all your ongoing tax and record-keeping responsibilities can be more challenging. You are not expected to be a tax expert, and getting professional advice can give you peace of mind.
If you would like calm, practical support, Penney’s Accountancy works with UK small businesses in and around Farnborough and the surrounding areas. We can help you register as a sole trader, advise you on your record-keeping, and prepare and file your annual Self-Assessment tax return for you.
Want to Learn More in Your Own Time?
For those who want to build their confidence and understand these topics in more detail, Penney’s Finance School offers an online, self-paced business and finance course. It covers everything from company setup to cash flow and tax, allowing you to learn at your own pace.
Important information
The information provided in this article is intended as general guidance for UK businesses only and reflects UK tax legislation and HMRC guidance as of February 2026.
Tax rules and business requirements can change, and individual circumstances vary. Before acting on any of the information above, we recommend speaking to a qualified accountant who can provide advice tailored to your specific situation.