How to Become Self-Employed UK: The Step-by-Step Route
Quick answer
You become self-employed in the UK by trading for profit on your own account. If you earn more than GBP 1,000 from it in a tax year you must tell HMRC by registering for Self Assessment, then pay Income Tax and National Insurance on your profits. Below GBP 1,000 the trading allowance usually covers you.
Going self-employed: the steps and what each involves (2026/27)
| Step | What it involves |
|---|---|
| Check you count as self-employed | You run a business for yourself: you take the risk, set your prices, choose your hours and have your own customers |
| Check the GBP 1,000 line | Earn GBP 1,000 or less gross from self-employment in the tax year and the trading allowance usually means you need not register or report it |
| Choose your structure | Sole trader is the default and simplest; a limited company is a separate legal person you can set up instead |
| Tell HMRC | Register for Self Assessment as self-employed to get a Unique Taxpayer Reference (UTR); it is free |
| Meet the deadline | Register by the 5 October after the end of the tax year you started trading |
| Pay your tax | Income Tax on profits above your Personal Allowance, plus Class 4 National Insurance |
| Class 4 NI 2026/27 | 6% on profits from GBP 12,570 to GBP 50,270, then 2% above GBP 50,270 |
| Class 2 NI 2026/27 | Treated as paid once profits pass GBP 7,105; voluntary (GBP 3.65 a week) below that to protect your record |
| Keep records | All business income and expenses, kept for your tax return |
| Watch the VAT line | Register for VAT only once taxable turnover passes GBP 90,000 in a rolling 12 months |
Step by step
- 1
Check you count as self-employed
You are self-employed if you run a business for yourself: you take responsibility for its success or failure, set your own prices, decide how and when you work, and have your own customers. If you are unsure whether what you do counts as trading, the gov.uk "Working for yourself" check is the place to start.
- 2
Check the GBP 1,000 trading allowance first
Add up your gross self-employment income for the tax year (6 April to 5 April). GBP 1,000 or less and the trading allowance usually means you need not register or report it. Over GBP 1,000 and you must tell HMRC.
- 3
Choose your structure
Sole trader is the default and the simplest: you and the business are the same legal person. A limited company is a separate legal person with its own filing and costs. Most people start as a sole trader and switch later if it pays to.
- 4
Tell HMRC by registering for Self Assessment
Register online as self-employed through your Government Gateway account. HMRC posts your Unique Taxpayer Reference (UTR), which can take a couple of weeks, so do it in good time. It is free.
- 5
Register by the 5 October deadline
Register by the 5 October after the end of the tax year you started trading. Start in, say, June 2026 and you must register by 5 October 2027. Miss it and you risk a failure-to-notify penalty.
- 6
Keep records, then file and pay
Record all income and expenses, then file your Self Assessment return and pay any Income Tax and National Insurance by the following 31 January.
Going self-employed in the UK sounds like a formal status you have to apply for. It is not. You become self-employed the moment you start trading for profit on your own account; the paperwork is just telling HMRC about it. The steps above are the whole journey from idea to trading, and the table is the detail at a glance.
The first question is whether you need to do anything at all. If you earn GBP 1,000 or less from self-employment in a tax year, the GBP 1,000 trading allowance usually covers you and you need not register or report it. Go over GBP 1,000 and you must tell HMRC, by registering for Self Assessment, by the 5 October following the end of the tax year you started. It helps to separate three terms the search results tend to blur: self-employed is your tax status, sole trader is the default legal structure that comes with it, and a limited company is a separate legal person you can choose instead.
Once you know you need to act, pick your route. The cheapest, most common next step is to register as a sole trader, which is free and done online. If you would rather trade through a company, how to set up a limited company covers that path. Not sure which fits? Weigh the trade-offs in limited company vs sole trader, or run your own numbers in the sole trader vs limited company calculator.
Whatever the structure, the tax shape is the same idea: you pay Income Tax on profits above your Personal Allowance, plus Class 4 National Insurance (6% on profits from GBP 12,570 to GBP 50,270, then 2% above), and Class 2 is treated as paid once your profits pass the small-profits threshold. For how that bill is worked out and paid, see the self-employed tax guide. You only deal with VAT once your taxable turnover passes GBP 90,000 in a rolling 12 months, which most people starting out are nowhere near.
Figures are for the 2026/27 tax year and are taken from gov.uk; tax rules and thresholds can change. This is general information, not financial or tax advice.
Frequently asked questions
How much money can I earn before registering as self-employed?
You can earn up to GBP 1,000 gross from self-employment in a tax year before you need to tell HMRC. This is the trading allowance. Go over GBP 1,000 and you must register for Self Assessment and report the income, even if it is a side job.
Do I have to inform HMRC if I become self-employed?
Yes, if you earn more than GBP 1,000 from it in the tax year. You tell HMRC by registering for Self Assessment as self-employed. Below GBP 1,000 the trading allowance usually means you do not need to register or report the income at all.
What do you need to be self-employed in the UK?
You need to be trading for profit on your own account, then tell HMRC if you earn over GBP 1,000. There is no licence or fee to be a sole trader. You will need a Government Gateway account to register, and you must keep records of income and expenses.
How much does it cost to be self-employed in the UK?
Registering as a sole trader with HMRC is free. The cost is the tax you pay on your profits: Income Tax above your Personal Allowance and Class 4 National Insurance. A limited company is the route that carries set-up and filing costs at Companies House.
How much tax-free money can I earn self-employed?
Two allowances stack. The GBP 1,000 trading allowance covers small amounts of self-employment income. On top of that, your Personal Allowance (GBP 12,570 in 2026/27) is the income across all sources you can earn before any Income Tax is due.
Sources
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General information, not financial advice. Tax rules and figures can change; check the current position on gov.uk before acting.