How to become self-employed

Going self-employed is a big step — and the first one is getting set up correctly with HMRC. The process is simpler than most people fear. Here’s the checklist in order.

1. Decide your structure

Most people starting out trade as a sole trader — the simplest structure, where you and the business are the same legal person, you keep the profits, and you’re personally responsible for debts. The alternative is a limited company, which pays corporation tax and separates you from the business legally, but brings more admin. Compare both in our sole trader vs limited company guide.

2. Register for Self Assessment

You register with HMRC for Self Assessment by 5 October after the end of the tax year in which you started trading. If you started trading in the 2025/26 tax year, register by 5 October 2026. Registration is free and done online on GOV.UK. HMRC will set up your account and you’ll get a Unique Taxpayer Reference (UTR) within a few weeks.

3. Open a separate bank account

Not a legal requirement as a sole trader, but a huge practical one. A dedicated business account makes it obvious which transactions are business ones, which saves you hours at year end and keeps your tax return accurate.

4. Set up simple record keeping

You don’t need fancy accounting software to start — a spreadsheet of income and expenses works fine. What matters is consistency: record every sale and every expense, and keep receipts. It’s much easier to fix a mess six months in than a year later. See our business bookkeeping basics guide.

5. Keep your tax calendar in mind

Once you’re registered, the calendar is:

• 5 October — register if you’re new
• 31 January — file your online return and pay any balancing bill
• 31 July — second payment on account (if your bill is over £1,000)

You pay tax on your profit (turnover minus allowable expenses), plus Class 4 National Insurance. Our self-employed tax explained guide walks through the numbers.

6. Think about VAT early

If your taxable turnover hits £96,000 in a rolling 12 months (2026/27 threshold), you must register for VAT. Growing businesses sometimes cross this without realising, so keep an eye on it from around £80,000 onwards. Voluntary registration is an option too. See our how VAT works guide.

7. Get the right insurance

Not compulsory for most, but worth thinking about: public liability insurance, professional indemnity if you give advice, and income protection if you rely on the income. Some clients will require certain cover.

Run the numbers

Estimate what your tax bill will look like with the self-employed tax calculator before you start — it helps you set aside the right amount each month so 31 January isn’t a shock.