Going self-employed in a trade

Becoming a sole trader

Most people start as a sole trader: the simplest business structure. You make the decisions and keep the profits after tax, but you are personally responsible for any business debts (unlimited liability). You can be employed and self-employed at the same time.

You must register for Self Assessment as a sole trader if you earn more than £1,000 from self-employment in a tax year (6 April to 5 April). HMRC must be told by 5 October after the end of the tax year – for the year that ended on 5 April 2026, that means by 5 October 2026 – or you could get a penalty.

• Keep records of income and expenses from day one
• You can trade under your own name or a business name, but a sole trader's name must not include 'Limited' or 'Ltd'
• Put your name and business name on invoices and letters

• Become a sole trader (GOV.UK)
• Register for Self Assessment

Making Tax Digital for Income Tax

Sole traders with higher incomes now have to keep digital records and send quarterly updates using compatible software. The start date depends on your qualifying income (turnover from self-employment and property, before expenses).

• Over £50,000 in 2024 to 2025 – you should have started from 6 April 2026
• Over £30,000 in 2025 to 2026 – you will need to start from 6 April 2027
• Over £20,000 in 2026 to 2027 – you will need to start from 6 April 2028

• Check if you need Making Tax Digital for Income Tax

The Construction Industry Scheme (CIS)

If you work as a subcontractor for a construction contractor, CIS will probably apply. It covers most building work, including alterations, repairs, decorating and installing heating, lighting, power, water and ventilation systems.

Under CIS the contractor deducts money from your payments and passes it to HMRC as an advance on your tax and National Insurance. The deduction is 20% if you are registered, and 30% if you are not – so registering matters. You can apply for gross payment status if you do not want deductions taken.

• What is the Construction Industry Scheme?
• What CIS subcontractors must do

VAT

You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days. You can choose to register voluntarily below that level.

• Register for VAT (GOV.UK)

Insurance

GOV.UK notes that sole traders may get more protection through business insurance. Once you employ someone, employers' liability insurance becomes a legal requirement: it must cover at least £5 million and come from an authorised insurer, and you can be fined £2,500 for every day you are not properly insured. There are limited exceptions, for example if you only employ close family members.

• Employers' liability insurance (GOV.UK)

Certification and building regulations

Some work is regulated whoever you work for. Anyone carrying out domestic gas work must be on the Gas Safe Register. In England, installers can join a competent person scheme to self-certify certain building work instead of getting building regulations approval – for example electrical work in homes, heating and hot water systems, replacement windows and doors, and re-roofing.

The government's Heat Training Grant, available to sole traders and small businesses certified by a competent person scheme for heating, offers up to £500 off heat pump training in England (as of September 2026).

• Competent person schemes (GOV.UK)
• Gas Safe Register
• Heat Training Grant

Taking on help

If you employ people you take on extra duties, including running payroll, paying employer National Insurance and providing workplace pensions for eligible staff, as well as employers' liability insurance. You also have some health and safety responsibilities for agency workers and freelancers you use.