If you’re starting to work for yourself full or part-time, it’s important to know how to register as self-employed. Not only to ensure you report your income, but also to ensure you can claim expenses and other support for your business.
With online auctions, sales and property rental sites now automatically sharing your revenue with HMRC, you might be above the £1000 annual tax-free trading allowance. This change means more people than ever will now need to file a Self Assessment tax return. You don’t need to be self-employed to do this, but you may decide it makes more sense to operate as a business.
This also includes if you’re freelancing around full-time employment, and if you’re setting up as a sole trader, partnership or as a limited company.
Everyone will be in a different individual situation, so it’s always worthwhile seeking advice for your specific circumstances. IPSE members have access to dedicated tax and legal helplines, along with tax and VAT investigation cover for more peace of mind. You can also get discounts or additional benefits from specialist accountants via IPSE Offers.
Why do you need to register as self-employed?
Registering as self-employed with HMRC will help to ensure that you’re paying the correct amount of tax and National Insurance contributions (NIC). Whether it’s your sole income or alongside other employment, this doesn’t necessarily mean you’ll need to pay any tax. You may have incurred losses in setting up your business, especially when you’re just starting out.
It’s also required if you need to prove you’re self-employed to claim tax-free child care, or universal credit etc.
When do you need to register?
Ideally, you should register at the earliest opportunity. But the latest deadline is by October 5th after the end of the tax year in which you became self-employed. If you started in January 2025, you’d need to register by October 5th, 2025, whereas if you started in May, you’d have until October 5th, 2026.
Leaving it until close to the deadline isn’t a good idea, as if anything goes wrong, you could find yourself with a large tax bill, and there’s no benefit to putting it off.
How to register as self-employed in the UK
If you’re not sure whether you count as running a business, then HMRC provides tools that can help you to clarify your status, including whether you need to tell HMRC about additional income.
In the view of HMRC, you’re probably running a business if you:
- take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit
Assuming you want to go ahead, you’ll need to register for a Government Gateway account, and use that user ID to complete your self-employed registration. The required information includes when you started trading, your National Insurance number, your address and contact details, and the main type of self-employed work you do (this doesn’t prevent you from also doing very different types of work in the future).
Your reward will be your 10-digit Unique Taxpayer Reference (UTR) which you use on all subsequent tax payments, along with enrollment for Self Assessment.
Once you’re registered as self-employed, you’ll then need to choose between the various business structures available depending on how you intend to operate. If you work in the construction industry, you’ll need to register for the Construction Industry Scheme (CIS).
Registering as a sole trader
Declaring yourself as self-employed refers to your tax status, but you then need to identify how your business is structured. The main choice is between becoming a sole trader or a limited company. If you’re intending to operate as a sole trader, you just need to choose your business name and register via the Gov.uk website. You’ll then be able to register as a sole trader by registering for Self Assessment (if you’ve previously registered for Self Assessment for a different reason, you’ll need to register again).
And that’s registration done. Going forwards, you’ll need to keep the appropriate records and pay your tax bill as required. We’ve shared a guide on how to pay yourself as a sole trader, along with Self Assessment tax returns for sole traders, and how to switch from a sole trader to a limited company if your objectives or circumstances change in the future.
Keeping track of your income tax, NIC and potentially VAT can become a lot of work, so we’ve compiled a list of the best invoicing and accounting tools and apps.
Partnerships and Limited Companies
The process is slightly more complicated if you’re setting up a partnership, whether it will be a business partnership, limited partnership, or limited liability partnership. You‘ll need to choose a nominated partner to send the partnership tax return, with other partners registering separately, or for a limited business, you’ll need to register with Companies House.
That’s also the case for a Limited Company, although you’ll also need to choose directors and a company secretary, and decide who will be shareholders or guarantors, even if you’re operating alone.
If you’re setting up a social enterprise, that can be done as a sole trader, partnership or limited company. But you can also create a charity, charitable incorporated organisation (CIO), co-operative, community interest company (CIC), or an unincorporated association, and there’s more information on all of these options on Gov.uk.
You can set up any type of company for yourself, with step-by-step instructions on the UK government website. Or you can employ a formation agent, accountant, or similar professional to assist you, which can help when Limited Companies are required to keep more detailed records of loans, payments, people with significant control, and accounting records.
How to stop being registered as self-employed
If you no longer wish to be registered as self-employed, you need to complete an online form to notify HMRC. You’ll also need to file a Self-Assessment tax return for your final trading year, settle any tax and NIC owed, cancel your VAT registration if necessary, and make sure that you keep business documents for six years.
Closing a limited company or having it struck off is more complicated, and we’ve created a detailed guide to all of your options, whether you want to shut things down permanently, or just let the business become dormant for a period of time.
How IPSE can help you register a self-employed business
Along with our range of guides to starting out in self-employment, IPSE also provides a range of events and training, including for those setting up a business.
The IPSE Incubator is specifically designed to help you build a sustainable self-employed business through a structured programme, and is included in our Kickstart membership package.
All IPSE members also get access to tax and legal helplines, which can answer any questions you have during the registration process. And access to IPSE Offers, which include discounts from partners who specialise in helping the self-employed, including setting up your business. Along with IPSE Rewards, you can access a wide range of deals and special offers which can save you time and money when you become self-employed.
