Last updated: 14 October 2026
Do you need to register as a sole trader if you earn under £12,570?
It depends on your gross income from self-employment, not your profit or the Personal Allowance. If your self-employed income (turnover) is more than £1,000 in a tax year, you must register for Self Assessment and file a return, even if your profit is under £12,570 and you pay no tax. If it is £1,000 or less, the trading allowance means you don’t need to tell HMRC.
The rules in 2026/27
| Gross self-employed income | What you must do |
| £1,000 or less | Nothing. It is covered by the trading allowance |
| Over £1,000 | Register for Self Assessment by 5 October after the tax year ends |
| Profit over £12,570 | Income tax at 20% and Class 4 NIC at 6% on profit above £12,570 |
| Profit £7,105 or more | Class 2 NIC is treated as paid, which protects your State Pension |
Why register even when no tax is due?
- It’s the law. Not registering can lead to penalties
- State Pension credits. Profits of £7,105 or more give you a qualifying year without paying Class 2. With lower profits, you can pay voluntary Class 2 at £3.65 a week
- Losses. Registering lets you record losses that you may be able to use against other income or carry forward
- Evidence of income for mortgages, Universal Credit and tenancies
Side hustles and online selling
Online platforms such as eBay, Vinted, Etsy and Airbnb now report sellers’ income to HMRC. Selling your own unwanted items is not trading. Buying to resell, or making and selling goods regularly, usually is.
The trading allowance vs actual expenses
If your income is over £1,000, you can either deduct the £1,000 trading allowance or deduct your actual expenses, but not both. Choose the trading allowance if your costs are low.
Example
Amira earns £4,000 from weekend baking and spends £600 on ingredients. Taking the £1,000 allowance, her profit is £3,000. Her total income is under £12,570, so she pays no income tax, but she must still register and file.
Employees with a side business
Your Personal Allowance is often used by your salary. In that case, all of your side-business profit is taxed at your main rate, 20% or 40%. You still have the £1,000 trading allowance threshold.
How to register
Register online at gov.uk. You will receive a 10-digit Unique Taxpayer Reference (UTR). Do this by 5 October after the end of the tax year in which you started. You don’t need to do anything with Companies House.
Keep simple records
Even with a small side business, keep a record of your income and expenses for each tax year, and keep receipts for 5 years after the filing deadline.
Frequently asked questions
Is the £1,000 based on profit or turnover?
Turnover, meaning your gross income before expenses.
What if I missed the deadline to register?
Register as soon as possible. Penalties depend on whether tax was due and why you were late.
Do I need Making Tax Digital?
Only if your qualifying income is over £50,000 from April 2026, or £30,000 from April 2027.
Can I be employed and self-employed?
Yes. You will pay tax on both through your tax return.
Related: sole trader tax returns and AIA for sole traders.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with registering as a sole trader. See our sole trader accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
