Last updated: 14 October 2026
What do you have to do when you become self-employed?
Register with HMRC for Self Assessment by 5 October after the end of the tax year in which you started, keep records of your income and expenses, file a tax return by 31 January each year and pay your income tax and Class 4 NIC. If your turnover goes over £90,000, register for VAT. From April 2026, if your qualifying income is over £50,000, you must also use Making Tax Digital for Income Tax. You don’t need to register if your gross trading income is £1,000 or less a year, as the trading allowance covers it.
Checklist for new sole traders
- Check you’re genuinely self-employed, not an employee
2. Register for Self Assessment online and get your UTR
3. Open a separate bank account (recommended)
4. Set up a record-keeping system or accounting software
5. Check licences, insurance and permits for your trade
6. Consider VAT registration if close to £90,000
7. Plan for your tax bill and payments on account
Taxes for 2026/27
| Tax | Rate | Threshold |
| Income tax | 20%, 40%, 45% | Above £12,570 Personal Allowance |
| Class 4 NIC | 6% (2% above £50,270) | Profits above £12,570 |
| Class 2 NIC | Not payable; voluntary £3.65 a week if profits are low | Profits below £7,105 |
| VAT | 20% standard | Turnover over £90,000 |
Records you must keep
- Sales and income, with invoices
- Business expenses, with receipts
- Bank statements
- Mileage logs if using a vehicle
- Records must be kept for at least 5 years after the 31 January deadline
Example
Jordan starts as a self-employed personal trainer in September 2026. He registers for Self Assessment in November 2026, opens a business account and uses an app to track sessions and costs. By April 2027, he’s made £14,000 profit. He files his first return by 31 January 2028, paying £286 tax and £86 Class 4 NIC. As his bill is under £1,000, no payments on account are due.
Making Tax Digital
From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records and send quarterly updates through compatible software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.
Insurance and pensions
You don’t get sick pay or a workplace pension, so consider income protection and a personal pension. Pension contributions get tax relief.
Common mistakes
- Not registering on time
- Mixing personal and business spending
- Not saving for the tax bill
- Missing allowable expenses
Expenses you can claim
Allowable costs include equipment, tools, stock, travel to clients, phone and internet (business share), insurance, advertising, professional fees and training to update existing skills. If you work from home, you can claim a proportion of household costs or use HMRC’s flat rates. Alternatively, claim the £1,000 trading allowance instead of actual expenses if your costs are very low.
Frequently asked questions
Do I need an accountant?
Not required, but helpful.
Can I work from home?
Yes, and claim a share of costs.
Do I need a business name?
No, you can trade under your own name.
Can I be employed and self-employed?
Yes, report both on your return.
Related: planning for tax when going freelance, freelance income while employed and using a personal bank account.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with getting started as self-employed. 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.
