Registration as Self-Employed

If you work for yourself as a sole trader, you are classed as self-employed. You can be both employed and self-employed at the same time, for example, employed during the day, running your own business in the evenings. If you work in construction as a subcontractor, you may also need to register for the Construction Industry Scheme, CIS.

When to register

  • You must register for Self Assessment if your self-employment income is more than £1,000 in a tax year, this is the trading allowance.

  • If you need to file and have not sent a return before, you must register by 5 October following the end of the tax year in which you started trading.

  • After you register, HMRC will set up your records and send your Unique Taxpayer Reference, UTR by post.

How to register

  1. Make or sign in to your Government Gateway account.

  2. Use HMRC’s “Register for Self Assessment as a sole trader” service.

  3. If you already file for another reason, add sole trader so HMRC records your Class 2 National Insurance position correctly.

  4. If you are in a partnership, register using HMRC’s partner registration process.

Your annual responsibilities

  • Keep accurate business records of income and expenses, and keep them for at least 5 years after the 31 January deadline for the relevant tax year.

  • Complete a Self Assessment tax return each year, online by 31 January following the end of the tax year, pay any tax due by the same date. If required, payments on account are also due on 31 January and 31 July.

  • If you want HMRC to collect up to £3,000 you owe through your PAYE tax code, submit your online return by 30 December.

Payments on account, when and how much

Payments on account are advance payments towards your next Self Assessment bill. They help spread the cost across the year.

Who must make them
You will usually make payments on account if, for the previous tax year, your Self Assessment bill, including Class 4 National Insurance where applicable, was over £1,000, and less than 80% of your total tax was already collected at source, for example through PAYE.

What they cover
Payments on account cover Income Tax and Class 4 National Insurance for self-employed profits. They do not include Capital Gains Tax or student loan repayments, these are settled in your balancing payment.

How much to pay
There are two payments on account each year. Each is normally 50% of your last year’s bill.

  • First payment, 31 January within the tax year.

  • Second payment, 31 July after the tax year.

Balancing payment
When you submit your return, you compare what you owe for the year with what you have already paid on account.

  • If you owe more, the balancing payment is due by 31 January following the tax year.

  • If you owe less, you may be due a refund.

Important first year point
If this is the first time you are in payments on account, your 31 January bill can include both, the full amount for the year just ended, and the first payment on account for the new year. The second payment on account will then be due on 31 July.

If your current year will be lower
You can reduce payments on account through your HMRC online account or by submitting form SA303. If you reduce them too much and underpay, HMRC will charge interest on the shortfall.

How to pay or spread the cost

  • Pay online by bank transfer, card, or set up Direct Debit in your HMRC account.

  • Use HMRC’s Budget Payment Plan to make weekly or monthly payments towards your next bill.

  • If you cannot pay by the deadline, you may be able to set up a Time to Pay arrangement to pay in instalments.

National Insurance for the self-employed, 2025/26

  • If your profits are £6,845 or more, Class 2 contributions are treated as paid to protect your State Pension record, you do not pay Class 2.

  • If your profits are under £6,845, you can pay Class 2 voluntarily, £3.50 per week in 2025/26.

  • You pay Class 4 on profits, 6% between £12,570 and £50,270, 2% above £50,270.

Making Tax Digital for Income Tax, what is coming

MTD for Income Tax will be phased in. If your qualifying income from self-employment and property is over £50,000 in 2024/25, you must use MTD from 6 April 2026. If it is over £30,000 in 2025/26, you must use MTD from 6 April 2027. The government plans to legislate to lower the threshold to £20,000 in a later phase.

Construction Industry Scheme, if you work in construction

  • Subcontractors should register for CIS so contractors can verify you and apply the correct rate.

  • Contractors must register and file monthly CIS returns by the 19th following each tax month.

How PK Financial Services can help

  • Register you for Self Assessment quickly and accurately, handle UTR and HMRC setup.

  • Advise on CIS, VAT and other registrations if relevant.

  • Set you up with compliant digital bookkeeping, ready for MTD.

  • Prepare your annual tax return, calculate payments on account, and keep you ahead of every deadline.