Tax · Self-employment

Working for yourself in the UK: register by 5 October, sole trader taxes in 2026 and HMRC's digital rules

Q: When can you skip registering?

If your self-employed income for the tax year was £1,000 or less (before expenses), no tax return is needed. Selling a few things online or occasionally letting a room short-term is not yet trading — but do it regularly and HMRC may see it differently; in a grey area it is cheaper to ask HMRC itself.

Q: What tax does a sole trader pay?

Tax is charged not on turnover but on profit: income minus allowable expenses, then the normal Income Tax bands after the £12,570 personal allowance. Allowable expenses include: office and phone costs, business travel (not commuting), protective clothing, staff wages, stock, bank and insurance charges, premises rent and bills, advertising and your website, and training in your field.

Q: How much National Insurance in 2026/27?

Class 2 no longer needs paying: with profits of £7,105 or more a year it is treated as paid — your state pension record keeps building for free. Below £7,105 you can pay voluntarily — £3.65 a week in 2026/27 — to keep the year counting towards your pension. Class 4 is charged on profits above £12,570: 6% up to £50,270 and 2% above. All of it is calculated and paid through Self Assessment.

Q: What are the filing and payment deadlines?

Paper returns by 31 October, online by 31 January; the tax itself is also due by 31 January. With a bill over £1,000 HMRC usually asks for advance “payments on account” towards the next year, the second half due by 31 July. If your bank has already reported your interest and a P800 letter arrived, we covered what to do with it.

Started working for yourself in 2025/26? You must register for Self Assessment by 5 October or risk a penalty. The HMRC rules: the £1,000 threshold, 6% and 2% contributions, a free pension record from £7,105 of profit, and the Making Tax Digital quarterly updates already mandatory above £50,000.

Published 26 September 2026, 15:14 5 min read Editorial

A pale blue ice cream van with a customer on a street in central London — An ice cream van in central London — the classic one-person business. A sole trader pays tax on profit, not turnover. Photo: ONLYWAY NEWS

Working for yourself in Britain is easy to start — and ends in a penalty if you miss one date: anyone who began self-employment in the 2025/26 tax year must register for Self Assessment by 5 October 2026. That is less than two weeks away. The year’s other change: from 6 April 2026, Making Tax Digital is live for the self-employed with income over £50,000 — digital records and quarterly updates instead of one annual return.

Here are the GOV.UK and HMRC rules: who counts as self-employed, when to register, what a sole trader pays in tax and National Insurance in 2026/27, and who the new digital rules already cover.

Who counts as self-employed?

HMRC looks at the signs of “trading”, not the labels: you sell goods or services regularly for profit, make things to sell, earn commission on other people’s goods or get paid for a service. Signs you are “running a business”: you carry the success or failure yourself, have several customers at once, decide how, where and when you work, provide your own equipment and set an agreed price. You can combine it with employment: a day job on payroll, your own trade in the evenings.

When can you skip registering?

If your self-employed income for the tax year was £1,000 or less (before expenses), no tax return is needed. Selling a few things online or occasionally letting a room short-term is not yet trading — but do it regularly and HMRC may see it differently; in a grey area it is cheaper to ask HMRC itself.

What is the 5 October deadline?

You must tell HMRC that you need a tax return for the previous tax year (6 April 2025 to 5 April 2026) by 5 October 2026 — by registering for Self Assessment. Telling them later risks a penalty. Registration brings your UTR — the taxpayer reference without which you cannot file. It also applies if you were registered before but did not file last year: the account gets reactivated.

What tax does a sole trader pay?

Tax is charged not on turnover but on profit: income minus allowable expenses, then the normal Income Tax bands after the £12,570 personal allowance. Allowable expenses include: office and phone costs, business travel (not commuting), protective clothing, staff wages, stock, bank and insurance charges, premises rent and bills, advertising and your website, and training in your field.

How much National Insurance in 2026/27?

Class 2 no longer needs paying: with profits of £7,105 or more a year it is treated as paid — your state pension record keeps building for free. Below £7,105 you can pay voluntarily — £3.65 a week in 2026/27 — to keep the year counting towards your pension. Class 4 is charged on profits above £12,570: 6% up to £50,270 and 2% above. All of it is calculated and paid through Self Assessment.

What are the filing and payment deadlines?

Paper returns by 31 October, online by 31 January; the tax itself is also due by 31 January. With a bill over £1,000 HMRC usually asks for advance “payments on account” towards the next year, the second half due by 31 July. If your bank has already reported your interest and a P800 letter arrived, we covered what to do with it.

What is Making Tax Digital, and who does it already cover?

It moves the self-employed and landlords to digital record-keeping: entries in compatible software and quarterly updates to HMRC instead of one annual return. The schedule runs on “qualifying income” (self-employment and property turnover before expenses): over £50,000 in 2024/25 — mandatory from 6 April 2026 (already in force; if you have not signed up, it is time); over £30,000 in 2025/26 — from April 2027; over £20,000 in 2026/27 — from April 2028. HMRC checks your income from each return and writes to those over the threshold. Exemptions exist — for the digitally excluded, for example.

I am employed and earn on the side — does this apply to me?

If the side income beat £1,000 in the year — yes: register and file; your employer and PAYE are unaffected. Under £1,000 — nothing to do. For what jobs pay and what you keep after tax, see our guide to working in England.

What should you do today, in short?

Started working for yourself in 2025/26 — register for Self Assessment before 5 October; it takes 10 minutes online. Been trading for years — check your 2024/25 qualifying income: over £50,000 means you should already be keeping digital records. And keep receipts and statements from day one: tax is charged on profit, and profit cannot be proven without your expenses.

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