Registering as self-employed: Everything you need to know

Starting your own business can be incredibly exciting, but it can also be a little daunting, especially when it comes to understanding the different rules and regulations you need to follow.

As part of this process, you might need to register as self-employed, so here’s how to go about it.

Who needs to register as self-employed?

You’re classed as self-employed if you run and have full responsibility for your own business. If you’re self-employed, you usually decide when you work and who you work for. You can have more than one client at the same time, and you don’t receive a regular salary. 

You might be self-employed if you’re a freelancer, contractor, tradesperson or a small business owner. If you’re not sure, use HMRC’s Employment Status tool to check.

It’s important to register as self-employed in these instances so that HMRC knows how much you’re earning and can charge the right amount of tax. 

It is important to note that being a sole trader isn’t necessarily the same thing as being self-employed. A sole trader refers to the structure and type of business, whereas being self-employed refers to how you pay your taxes. Find out more in our guide to being a sole trader vs self-employed. 

You won’t need to register as self-employed if you’re a limited company. There are separate rules for setting up a limited company. 

How to register as self-employed for the first time

The process of registering as self-employed is the same as registering for self-assessment. 

Follow the steps below to start:

Step 1: Create a Government Gateway account

If you haven’t previously registered for self-assessment, the first step is to head to the gov.uk website and create a Government Gateway account. If you’re setting up as a partnership rather than as a sole trader, you need to register on a separate part of the gov.uk website. 

Creating a Government Gateway account gives you access to HMRC’s online services. 

Step 2: Fill in the registration form

Once you’ve registered, you should receive a user ID and can set your own password. This enables you to log into your account, where you can fill in the online form, providing details such as your name, address, National Insurance number, and the work you plan to do. You must also state the date you started trading.  

Step 3: Submit the form

Once you’ve completed the form, submit it so that HMRC can process it and send you confirmation.

If you prefer not to register online, you can call the HMRC helpline or print out the relevant form, complete it, and send it in by post instead. If you’re a partnership, you need to fill in form SA400, and if you’ve joined a partnership you must use form SA401.

Step 4: Receive your Unique Taxpayer Reference (UTR)

Once processed, HMRC sends you a letter containing your 10-digit UTR. You need this for all future tax returns, so keep it safe. Your 10-digit UTR confirms that you are now enrolled for self-assessment and are officially self-employed.

When do you need to register as self-employed?

You need to register as self-employed by 5 October in your business’ second year, although you can register as soon as you start trading if you prefer. This applies even if you already complete a self-assessment tax return for another reason – for example, if you’re a landlord receiving rental income. 

How do you register for self-assessment? 

You register for self-assessment at the same time as you register for self-employment. If you’re not self-employed, you can still register for self-assessment by creating a Government Gateway account and filling in the form. 

Thanks to the trading allowance, you might not need to register if you earn less than £1,000 from self-employment during the tax year. However, even in that case, it can be beneficial to do so as you can claim business expenses and make National Insurance contributions towards your state pension.  

How to manage your account

Once you’ve registered as self-employed, you should keep HMRC informed about any changes to your business, such as a change to your business structure, hiring staff or taking on a partner, as well as any changes to your personal details. 

You can use your Government Gateway account to file your tax return, view your tax account and update your personal details. It’s sensible to log into your account regularly to check everything is in order and that you are on top of your tax payments. 

What tax do you need to pay if you’re self-employed?

As part of being self-employed, you should also understand what small business tax you need to pay. This includes:

Income tax

You must complete a self-assessment tax return each year. This enables HMRC to calculate how much income tax you need to pay based on your earnings once you’ve deducted all allowable business expenses.

You must file your self-assessment tax return by 31 October if filing on paper (for the previous tax year). If you’re filing online, the deadline is 31 January. This is also the deadline for paying any tax you owe. In addition, you may need to make advance payments towards your next tax bill. These advance contributions are known as payments on account. The deadline for these is 31 July. 

National Insurance contributions

You must pay Class 4 National Insurance if your profits are over £12,570. Again, you pay this through self-assessment.

As of 6 April 2024, self-employed taxpayers no longer need to pay Class 2 National Insurance. If your profits are £6,725 or more, your contributions are treated as having been paid to protect your National Insurance record and, therefore, your state pension. 

If you have profits of less than £6,725 a year, or you have a specific job, such as an examiner or business owner in property or land, and you don’t pay Class 2 National Insurance through self-assessment, you may be able to make voluntary contributions. 

VAT

If your business turnover is more than £90,000 (previously £85,000) in any 12-month period, you must register for VAT. This means you must charge your customers VAT and pay the VAT you’ve collected to HMRC each quarter. However, you can also claim back any VAT you’ve had to pay as an expense. To do this, you must complete a VAT return four times a year.  

Managing your tax payments when you’re self-employed

To help you stay on top of your tax payments, it’s crucial to keep accurate financial records. You can do this manually or use software and finance tools to help you. You might also want to hire an accountant.

In addition, it’s often worth opening a business bank account to keep your business and personal finances separate. This makes it far easier to establish what’s what when you complete your tax return.

Do you need insurance if you’re self-employed?

There’s a range of different types of self-employed insurance that you should consider for your business. These insurance policies can protect you from a variety of risks and ensure you’re not left out of pocket if, for example, a client suffers an injury on your property, you make a mistake in your work, or you fall ill and cannot work for a while. 

How do you stop being self-employed? 

If you decide to close your business and are no longer self-employed, you can de-register for self-assessment by logging into your Government Gateway account. You can then fill in an online form, stating the date you stopped being self-employed.

Note that if you earned over £1,000 over the previous tax year, you must still complete a self-assessment tax return for that year and pay any tax due.