How to Register as a Sole Trader With HMRC (and Get Your UTR)

To register as a sole trader you tell HMRC you are self-employed by registering for Self Assessment at gov.uk/register-for-self-assessment. It is free, takes about 10–15 minutes online, and HMRC then sends you a Unique Taxpayer Reference (UTR) by post. The hard deadline is 5 October after the end of the tax year you started trading in — so if you began in 2026/27, register by 5 October 2027.

Key points

• Registering costs nothing — HMRC does not charge a fee, and you do not register a sole trader business with Companies House.
• If your gross self-employed income is £1,000 or less in the tax year, the trading allowance usually means you don't need to register at all.
• Your UTR is a 10-digit number that arrives by post, normally within about 15 working days.
• You can be employed and a sole trader at the same time — your PAYE job carries on as normal.
• First tax bill for 2026/27 profits is due by 31 January 2028, and it may include a payment on account on top.

Do you actually need to register?

Not every bit of extra income needs a tax return. The test is your gross self-employed income for the tax year (6 April to 5 April), before expenses.

The £1,000 trading allowance

The trading allowance makes the first £1,000 of self-employment or casual income tax-free. If your total gross trading income for the year is £1,000 or less and you have no other reason to file, you don't need to register as a sole trader or send a return. Go a penny over and you do need to register — although you can still deduct the £1,000 allowance instead of your actual expenses if that gives a lower profit.

If you are somewhere near the line, run the numbers first with our side hustle check, which tells you whether your extra income crosses the registration threshold and roughly what tax it would create. If your situation is more complicated — rental income, high earnings, dividends, Child Benefit — use do I need to file a tax return? instead.

Other reasons you'd need to register

• You trade over £1,000 gross, even at a loss — losses still need reporting if you want to use them.
• You want to claim Self Assessment reliefs or record a loss for a future year.
• You need voluntary Class 2 National Insurance to protect your State Pension record (see below).
• You want to prove self-employed income for a mortgage or Tax-Free Childcare.

Selling occasional unwanted personal items is not trading. Buying or making things to sell for profit, providing services, or renting out equipment usually is. Online platforms now report seller data to HMRC, so income that feels invisible often isn't.

How to register as a sole trader, step by step

1. Gather your details. You need your National Insurance number, full name and date of birth, home address, contact details, the date you started (or will start) trading, what the business does, and your business name and trading address if different from home.
2. Create or sign in to a Government Gateway account. Start from gov.uk/register-for-self-assessment. New users set up a Gateway ID; existing users sign in with the one they already have. Identity checks may ask for passport, payslip or P60 details.
3. Choose the self-employed route. Registering as self-employed uses form CWF1 (completed online in most cases). The alternative, SA1, is for people who need a tax return for other reasons — property income, high income, untaxed investment income — and not for a trade.
4. Enter your start date. Use the date you first traded or advertised for business, not the date you registered. This determines which tax year your first return covers.
5. Submit and wait for the post. HMRC confirms on screen, then posts your UTR. A separate activation code for online Self Assessment may follow. Keep both — you'll need them every January.

How much does it cost?

Nothing. Registration is free through GOV.UK. Companies charging a fee to "register your sole trader business" are simply filling in the same free form on your behalf. Unlike a limited company, a sole trader has no incorporation fee, no confirmation statement and no Companies House filing — your accounts stay private.

What about VAT and a business bank account?

VAT is separate and only compulsory once your taxable turnover passes the £90,000 registration threshold on a rolling 12-month basis (or you expect to pass it in the next 30 days). Most new sole traders are nowhere near it. A dedicated bank account isn't legally required either, but it makes your bookkeeping far easier.

Your UTR: what it is and when it arrives

A UTR is a 10-digit Unique Taxpayer Reference that identifies you in the Self Assessment system. You keep the same UTR for life, even if you stop trading and start again years later. If you have filed a return before, you already have one and should reuse it rather than create a second record.

HMRC posts the UTR to the address on your registration — it is not shown on screen at the end of the form, and HMRC will not read it out as your only proof of identity. Expect roughly 15 working days, longer if you are overseas.

If it doesn't arrive, check your HMRC online account or the HMRC app before calling — the UTR often appears there, and on any Self Assessment letter or statement. You will need it to file, to pay, and to give to contractors if you work in construction under CIS.

Deadlines: the 5 October rule and what comes after

The registration deadline is 5 October following the end of the tax year in which you started trading. Miss it and HMRC can charge a failure-to-notify penalty based on the tax you owed and how late you were, though a penalty is often reduced to nil if you register and pay everything on time. Our guide to the 5 October Self Assessment registration deadline walks through how the penalty is worked out.

Note the quirk: start in March and you get a very short first tax year but the same deadlines as someone who started the previous June. Registering early is harmless — you can register as soon as you begin trading.

Missing the 31 January filing deadline triggers an automatic £100 penalty even if no tax is due, with further penalties and interest after that.

What you'll owe once you're registered

As a sole trader you pay Income Tax on your profits (income minus allowable expenses) plus Class 4 National Insurance. For 2026/27 the Personal Allowance is £12,570, the basic rate is 20% on the next £37,700 of taxable income, and Class 4 NI is 6% on profits between £12,570 and £50,270, then 2% above that.

Worked example: £28,000 of profit

• Profit: £28,000. Personal Allowance: £12,570. Taxable income: £15,430.
• Income Tax: £15,430 × 20% = £3,086.
• Class 4 NI: £15,430 × 6% = £925.80.
• Total due: £4,011.80, payable by 31 January 2028.
• Because that exceeds £1,000, HMRC also asks for a payment on account of £2,005.90 by 31 January 2028 and another £2,005.90 by 31 July 2028 towards 2027/28 — so the first January bill is £6,017.70.

That first-January double hit catches out almost every new sole trader. Set money aside from day one.

Scotland

Scottish taxpayers pay Scottish Income Tax rates on non-savings income, including trading profits: 19% starter, 20% basic, 21% intermediate, 42% higher, 45% advanced and 48% top, with the higher rate starting once taxable income passes £31,092. National Insurance is identical UK-wide, and the Personal Allowance is the same £12,570.

Class 2 and your State Pension

Class 2 NI is no longer compulsory. If your profits are above the small profits threshold of £7,105 you are treated as having paid it and build a qualifying year automatically. If profits are below £7,105, you can pay voluntary Class 2 at £3.65 a week to protect your record — relevant because the full new State Pension is £241.30 a week and needs 35 qualifying years.

Making Tax Digital

Making Tax Digital for Income Tax began in April 2026 for sole traders and landlords with gross income above £50,000, meaning digital records and quarterly updates instead of one annual return. Brand-new traders are generally brought in once HMRC has a return showing income above the threshold, so a first-year sole trader usually files a normal return first.

What to do next

If you are still deciding whether you have crossed the line into needing to register, start with the side hustle check — it takes the guesswork out of the £1,000 trading allowance. Once you know you're registering, use the self-employed tax calculator to work out your Income Tax, Class 4 NI and payments on account so the January bill holds no surprises.