Once you have decided to become self-employed, you will need to register as a sole trader with HM Revenue & Customs (HMRC). You can complete this registration online. As a sole trader, you will be responsible for paying your own income taxes and National Insurance contributions.
Register with HMRC Taxes
Use the HMRC Taxes registration link to begin your registration as a new business (see resources).
This process will also prompt you to create a Government Gateway account and a Self Assessment online account. You will need to have both of these accounts to pay your taxes and National Insurance every year.
Create your Government Gateway account when prompted (or login to your account if you already have one). Be sure to make a note of the User ID you are given, because you will need it to complete your registration.
Register for "Self Assessment (including Class 2 National Insurance contributions)."
Choose "Self-employed/Sole trader/Sole proprietor" as your business type.
Enter the date you began (or will begin) working for yourself.
Complete the registration form with your personal details and business details, including your name, business name, and contact information.
Submit your registration.
After you register online
Apply for a National Insurance contribution exemption if you expect your earnings to be low (for the form see Resources, 2).
Wait for HMRC to send you a ten digit Unique Taxpayer Reference (UTR) number.
Keep your UTR number in a safe place, because you will need it when you complete your Self Assessment tax returns and if you need to contact HMRC for any reason. Congratulations – you are now a registered sole trader in the UK!
Timing. To avoid penalties, you need to register your business with HMRC within three months of when you begin trading.
VAT. Keep in mind that if your annual turnover is over a certain amount, you will need to pay VAT. You can register for VAT at the same time that you register with HMRC Taxes - but you do not need to register until your turnover reaches this limit.