Going self-employed is exciting, and the tax side can feel like a fog of unfamiliar words. It's actually a short list, and most of it takes minutes. Here it is, in the order you'll meet it.
1. Check whether you need to tell HMRC, and do it on time
If your self-employed income is more than £1,000 in a tax year (before expenses), you need to register for Self Assessment. Below that, the "trading allowance" usually means you don't, although there are a few exceptions, for example if you want to claim a loss or pay voluntary National Insurance.
The deadline is 5 October after the end of the tax year you started in. Tax years run from 6 April to 5 April. So if you started working for yourself any time between 6 April 2025 and 5 April 2026, you must register by 5 October 2026.
Registering is free on gov.uk. HMRC then posts you a 10-digit Unique Taxpayer Reference (UTR). Keep it safe: you'll need it for every tax return, and some customers will ask for it.
2. Keep records from day one
Write down every payment you receive and every business expense you pay, as it happens, and keep the receipts. A photo stored in an app counts. You must keep your records for at least 5 years after the 31 January deadline for that year's tax return.
It feels like admin. It's actually money: every genuine expense you record lowers your profit, and your tax is worked out on your profit. Not sure what counts? Our expense guide goes through it item by item.
3. Open a separate bank account for the business
As a sole trader you don't legally have to. Do it anyway. When business and personal spending share one account, working out your profit becomes a detective job, and a separate account makes everything else on this list easier.
4. Start setting tax aside now, not in January
Nobody takes tax off your payments for you. Move a percentage of every payment into a savings account the day it arrives. 20% to 30% is a safe range for most people. Our article on how much tax to set aside explains the numbers, and why the first year needs extra.
5. Put the key dates in your calendar
| Date | What happens |
|---|---|
| 5 October | Deadline to register if you started in the previous tax year. |
| 31 October | Deadline for a paper tax return (most people file online instead). |
| 31 January | Deadline to file your tax return online and to pay the tax you owe, plus your first "payment on account" if you have one. |
| 31 July | Second payment on account, if you have them. |
Filing late costs £100 straight away, even if you owe no tax, and more the longer it goes on. You don't have to wait until January to file: filing early just tells you the bill sooner. You still pay on 31 January.
6. Send proper invoices
An invoice has a few legal must-haves: a unique number, your name, your customer's details, dates, a description and the amount. Getting them right also gets you paid faster. See what to put on an invoice.
7. VAT: probably not yet
You only have to register for VAT once your turnover goes over £90,000 in any 12 months in a row (or you expect it to within the next 30 days). Until then, don't charge VAT. Some businesses register voluntarily, usually when their customers are VAT-registered businesses themselves. That's a question worth asking an accountant.
8. Know that Making Tax Digital is coming
From 2027 and 2028, more sole traders will have to keep digital records and send HMRC a summary every three months. It depends on your turnover, and the threshold drops to £20,000 in April 2028. If you set up good digital habits now, it won't be a big change. Read Making Tax Digital, explained simply.
9. Know when to get help
For a simple one-person business, many people do their own tax return, and gov.uk walks you through it. An accountant earns their fee when things get more complicated: renting property as well, taking on staff, profits heading towards £50,000 or more, or thinking about becoming a limited company. Their fee is an allowable business expense, too.
Invoice4You is a free app for UK sole traders that covers items 2, 4 and 6 on this list: professional invoices and quotes, expenses with receipt photos, and a running estimate of the tax to set aside. It works on iPhone, Android and in your browser.
Sources: HMRC, Register for Self Assessment if you're self-employed; HMRC, Tax-free allowances on property and trading income; HMRC, Self Assessment deadlines and penalties; HMRC, VAT registration: when to register. This is general information, not tax advice.