Become a sole trader in the UK

Requirements – hardly any

You can trade under your own name or a business name. A business name must not include “Limited”, “Ltd”, “LLP” or “PLC”, must not be offensive and needs approval if it contains a sensitive word. You keep records of income and expenses and, if you employ staff, register as an employer with HMRC.

Register with HMRC

You register for Self Assessment with HMRC by 5 October after the end of the tax year (5 April) in which you started. If your trading income is no more than £1,000 a year, the trading allowance means you usually don’t have to register. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must use Making Tax Digital for Income Tax: digital records and quarterly updates; the threshold falls to £30,000 in April 2027 and £20,000 in April 2028.

You pay Income Tax on your profits and, for 2026/27, Class 4 National Insurance of 6% on profits between £12,570 and £50,270 and 2% above. If your turnover exceeds £90,000 in a rolling 12 months, you must register for VAT.

Know your liability – and start prepared with planix

As a sole trader you are liable for business debts with all your private assets. With higher risks – large contracts, staff or stock – a limited company is often the better choice. planix helps you plan your start as a sole trader, set aside money for tax and spot the right moment to incorporate.