Are you thinking about starting your own business? Maybe you’re passionate about turning your skills into something bigger. Becoming self-employed is a big milestone. It’s not just a legal process—it’s a personal commitment to follow your vision, take charge of your time, and build something meaningful from the ground up. And that takes confidence and drive.
Of course, with any big step, there come huge responsibilities. One of the first is registering as self-employed with HMRC. But don’t worry—this blog will walk you through the process in a clear, simple way, so you can focus on what you do best: building your future.
How do you know if you are classified as self-employed?
Let’s begin with the basics. You’re considered self-employed if:
- You’re in charge of your own business and accountable for how it performs.
- You have multiple clients or customers.
- You decide how, when, and where you work.
- You provide the equipment or tools needed to do your work.
It doesn’t matter whether you bake cakes from your kitchen, freelance as a designer, offer online coaching, or run a mobile car wash; you’re your own boss now. And at some point it is advisable to make it official.
Do you need to register?
Yes, you must register with HMRC if.
- You make more than £1,000 from self-employment in a single tax year (from 6 April to 5 April).
- You need to show you’re self-employed, for example, to apply for Tax-Free Childcare.
- You want to pay voluntary Class 2 National Insurance so you can build up your State Pension or qualify for certain benefits.
Even if you’re already registered for Self Assessment for another reason, you must also register separately as a sole trader/limited company. This is essential for making Class 2 National Insurance contributions which count towards your eligibility for benefits like the State Pension.
The deadline to register for Self Assessment is 5 October, after the end of the tax year in which you began working for yourself. So, if you started freelancing in July 2025, you’ll need to register by 5 October 2026.
Sole trader vs limited company: Which one’s better for you?
This is where many new entrepreneurs pause. Should you register as a sole trader or set up a limited company? Let’s figure it out.
Sole trader
This is the simplest route and the one most people start with.
Pros:
- Quick and free to register
Fewer reporting requirements - You keep all the profits after tax
Cons:
- You’re personally responsible for any business debts
- Fewer tax planning options than a limited company
If you’re dipping your toes into self-employment or testing a side hustle, becoming a sole trader might be the ideal start.
Limited company
A better choice if you’re planning to scale or want more legal separation between your personal and business finances.
Pros:
- Limited liability: your personal assets are (mostly) protected
- It may be more tax-efficient depending on income
- Appears more professional to clients and suppliers
Cons:
- More paperwork and ongoing responsibilities
- Slightly longer setup process
Still unsure? It’s completely okay to start as a sole trader and switch to a limited company later. Many business owners do exactly that once their income grows or circumstances change.
How to register as a sole trader?
Okay, let’s break this down simply. Here’s how to register as a sole trader:
1. Create a government gateway account
The UK government’s online services are accessible via the Government Gateway portal. To access it, you need to set up an account.
Setting up your Government Gateway account is easy.
- Go to the HMRC login page
- Click Sign In
- Choose Create sign-in details
- Enter your email address
- Check your inbox for a verification code and enter it
Once these steps are done, HMRC will issue you a unique user ID for your new Government Gateway account.
2. Register for Self Assessment
Here’s how you can register for Self Assessment through your HMRC business tax account:
- If you already have a business tax account, sign in using your Government Gateway ID and password.
- Once you’re in, add Self Assessment to your list of services.
- If you don’t have an account, go to the HMRC login page and click Create sign-in details.
- Follow the instructions to register.
- HMRC will send you a letter with your Unique Taxpayer Reference (UTR) within 10 working days (or 21 days if you live abroad).
- You’ll also receive a second letter within 7 working days with an activation code.
- Once both arrive, sign in and activate your business tax account.
- After activation, you can add Self Assessment and file your tax return.
If you lose your UTR or activation code, contact HMRC to get a replacement.
How to register a limited company?
Follow these steps to set up your limited company:
1. Choose your company type
Most UK businesses register as a private company limited by shares
2. Pick a name and check availability
Use the Companies House name-check tool to ensure your chosen name is unique
3. Appoint directors and shareholders (or guarantors)
You must have at least one director, and one shareholder (these can be the same person)
4. Identify people with significant control (PSC)
Disclose anyone with more than 25% ownership or voting rights
5. Prepare company documents
- Memorandum of Association
- Articles of Association
- Statement of capital or guarantee
6. Set your registered office and SIC code
Provide an official UK address and choose the appropriate Standard Industrial Classification code
7. Verify your identity
Directors and PSCs must verify their identity using GOV.UK One Login (passport, driving licence, etc.), either online or via Post Office, to comply with UK regulations
8. Register online with Companies House
Pay the £50 fee online (or £71 by post using form IN01). Most online applications are accepted within 24 hours
9. Get Government Gateway credentials
After incorporation, set up a new Government Gateway user ID and password (a company-specific login) to access HMRC services
10. Receive your certificate of incorporation and UTR
You’ll get a certificate of incorporation with your company number and a 10-digit UTR from HMRC, typically within 10 working days
11. Sign in to HMRC and enrol in Corporation Tax
Use your Government Gateway login to access your business tax account and enrol for Corporation Tax
Don’t forget Making Tax Digital (MTD)
From April 2026, most self-employed people earning over £50,000 will need to keep digital business records and file quarterly updates to HMRC under the Making Tax Digital scheme.
If your income is between £30,000–£50,000, you’ll need to comply from April 2027.
This means keeping accurate digital records of your income and expenses. It might seem like a hassle at first, but getting support from an accounting expert and using dedicated software, can make the process much simpler and stress-free.
Pro tip: start early, even before it’s required. You’ll thank yourself when the deadline rolls around.
Why should you work with an accountant?
Honestly? It depends on your confidence in numbers and your time.
If you feel overwhelmed by tax forms, unsure about deductions, or don’t want to miss a deadline, we can be a huge help. They can also:
- Help you choose between a sole trader or a limited company
- Register your business for you
- Set up MTD-ready software
- Help you pay less tax (legally, of course!)
Reach out to us today, and let’s build your dream with confidence together.
