Small business
How to register as a sole trader (and the deadline people miss)
Registering as a sole trader is genuinely quick: you register for self assessment with HMRC, get your Unique Taxpayer Reference, and you're in business. The parts people get wrong are the deadline, the £1,000 rule, and what happens after.
Do you actually need to register?
If you earn more than £1,000 from self-employment in a tax year (that's income before expenses, not profit), yes. Under £1,000, the trading allowance usually covers you and registration is optional — though registering voluntarily can still make sense if you want to make voluntary NI contributions or prove income for a mortgage.
The deadline that catches people
You must register by 5 October after the end of the tax year you started trading in. Start trading in February 2026 (the 2025/26 tax year, which ended 5 April 2026) and your registration deadline is 5 October 2026. Miss it and you risk penalties — and worse, you compress everything into a January panic.
How to register
Register for self assessment on GOV.UK (you'll sign in with, or create, a Government Gateway account and tell HMRC about your business). HMRC posts your UTR — Unique Taxpayer Reference — which is your tax identity from then on. That's it; there's no fee, and no separate "sole trader licence" despite what some websites imply. If your name isn't the business name, check your trading name doesn't mislead or clash with a trademark.
What actually matters after registering
Three habits set you up properly from day one. Separate the money — a dedicated account for business income and costs turns your tax return from archaeology into admin. Keep digital records from the start — Making Tax Digital is progressively bringing sole traders into quarterly digital reporting, so starting on software like Xero now means never having to convert a shoebox later. Put tax aside as you earn — a rough 25–30% of profit into a separate pot means January's bill (and the payments on account that surprise every first-year sole trader) are already funded.
When to get help
Plenty of sole traders run their own affairs happily. The moments to talk to an accountant: your first year-end (to make sure you're claiming everything you're entitled to), when income grows towards the VAT threshold, and when you start wondering whether a limited company would serve you better — a question we answer honestly, including when the answer is "not yet". If you're starting out in Leeds, the first conversation with us is free.
This is general information, not advice for your circumstances. If you'd like it applied to your situation, get in touch — the first chat is free.
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