Going self-employed in the UK means working for yourself and telling HMRC about it — that is the whole legal requirement. You register for Self Assessment, keep records of what you earn and spend, and file a tax return once a year. Registration is free, takes minutes online, and you can be working for yourself this week. The parts that deserve real thought are the money — pricing, tax to set aside, no sick pay — and this guide covers those properly.
At a glance
| Feature | Detail |
|---|---|
| What it means legally | You work for yourself and report your income to HMRC through Self Assessment |
| How to register | Online with HMRC — free, and it takes minutes |
| When you must register | Once your income passes the £1,000 trading allowance, and by 5 October after the end of that tax year |
| What you'll pay | Income Tax and National Insurance on profits, through your annual return |
| What you give up | Sick pay, holiday pay, employer pension — your prices have to cover them instead |
| Sole trader or limited company | Most people start as sole traders; some incorporate later |
What self-employed actually means
Self-employed is a tax status, not a job description. It covers the plumber with a van, the freelance designer, the childminder, the person selling on Etsy at weekends. If you work for yourself and you are paid by customers or clients rather than through an employer's payroll, HMRC sees you as self-employed — and expects you to report the income.
One distinction that trips people up: self-employed and sole trader are almost the same thing — a sole trader is the legal structure most self-employed people use. The alternative is running your work through a limited company, in which case you are technically an employee of your own company rather than self-employed. Our sole trader guide covers the structure itself; this page covers what day-to-day self-employment actually involves.
How to register
You register for Self Assessment on HMRC's website. You will need your National Insurance number and basic details about what you do. HMRC sends you a Unique Taxpayer Reference (UTR), and that is it — you are registered.
Two timing rules worth knowing. Below the £1,000 trading allowance of income a year you do not have to register at all — useful for testing an idea. And once you are past it, the deadline for registering is 5 October after the end of the tax year, but there is no benefit in waiting: registering is free and removes a deadline you would otherwise have to remember.
The money: what changes when you work for yourself
When you are employed, all the paperwork behind the scenes is done for you — tax taken before your pay lands, pension paid in, sick days covered. When you work for yourself, all of that becomes your job, and the people who do well are the ones who get on top of it early.
All your earnings are pre-tax. Nothing is deducted before the money reaches you — the tax and National Insurance fall due later, through your return. The habit that saves people: move a fixed slice of everything you earn — a common rule of thumb is a quarter to a third — into a separate account the day it arrives, and treat it as never having been yours.
Your price has to carry everything. Holiday, sick days, your pension, your kit, the quiet weeks. An employed salary of £30,000 and self-employed income of £30,000 are not the same money — the self-employed version still has to fund the things an employer used to. This is why pricing deserves more care than most people give it: our guide to working out what to charge does the arithmetic properly.
Income goes up and down. Even good self-employed years have slow months. Make sure you keep enough of a cash buffer for the tax you owe and the slow months — and know your numbers: what an average month brings in, and what your fixed costs are.
A worked example
Take Jamie, a plumber in Reading who left employment to work for himself. Employed, he took home a salary and never had to think about tax, pension or slow months. Self-employed, his £70 an hour has to cover the van, fuel, tools, insurance, the tax he sets aside from every invoice, his pension — and the two weeks in August when the phone goes quiet. At 25 chargeable hours a week that is roughly £7,000 a month of sales, and after the van and the set-asides it is a good living — but the £7,000 is not his — forget that, and January's tax bill hurts.
Create a mini business plan in minutes with Plan.business. Put in your rate, your hours and your costs, and it works out the rest — what you will actually keep, when you break even, and what you need to charge to hit your target.
What you still have to sort
Records, from day one. Every sale, every business cost. A simple spreadsheet works; the habit is the point. Business costs reduce your taxable profit, so poor records literally cost money.
Insurance. Public liability if your work takes you near other people or their property; professional indemnity if your advice or work could cost a client money. Neither is legally required for most trades, but one uninsured accident can end a business.
A separate bank account. Not legally required for sole traders, but mixing money turns every tax return into a dig through your personal statements.
Your pension. No employer is paying in any more. Starting small and early beats waiting until you can afford more.
The tax side — Self Assessment, what you can claim, National Insurance, payment deadlines — has its own guide: self-employed tax. And if your work is project-based for clients, our freelancing guide covers contracts, invoicing and finding work.
Employed and self-employed at the same time
Completely allowed, and very common — many people build the self-employed work up alongside a job until it can carry them. Your employment tax carries on through payroll as normal; the self-employed income goes on your Self Assessment return. Check your employment contract for anything about outside work, and be realistic about energy: the evening-and-weekend phase works best when you have a date in mind for going full time.
Figures correct as of September 2026. Tax thresholds, fees and rates change; check the linked GOV.UK pages before acting. Prices and costs shown are indicative and vary by area and by what's included.
What is Plan?
Plan is a free business operating system for people starting or newly running a UK business. It walks you, one simple step at a time, from your elevator pitch through brand, product and pricing, to a complete business plan — then uses everything it now knows about the business to help with the basics: logo and brand, marketing, a website, a bank account, funding, insurance, company registration. You can use as much or as little as you want.
Frequently asked questions
How do I register as self-employed? Register for Self Assessment on HMRC's website — it is free and takes minutes. You will need your National Insurance number. HMRC posts you a Unique Taxpayer Reference, and from then on you file a tax return each year reporting what you earned and spent.
How much tax will I pay when self-employed? You pay Income Tax and National Insurance on your profits — what is left after business costs — at the same income tax bands as everyone else. The practical difference is that nothing is deducted as you earn: the bill arrives with your return, so set money aside from every payment as you go.
Do I need to register if I only earn a little? Below HMRC's £1,000 trading allowance a year from self-employment you do not need to register or file. It exists so people can test an idea or sell a little on the side without paperwork. Past it, you register.
Can I be employed and self-employed at the same time? Yes. Your job is taxed through payroll as normal, and the self-employed income goes on your Self Assessment return. It is one of the most common ways to start — building the business up in the evenings until it can support you.
What am I entitled to if I am self-employed? Less than an employee, and it is worth knowing before you jump: no sick pay, no holiday pay, no employer pension contributions, and different parental pay rules. Your prices need to fund all of it — which is a pricing problem, and a solvable one.
Is it better to be a sole trader or a limited company? Most people start as sole traders because it is simpler and cheaper to run, then incorporate if profits grow. A limited company protects your personal money and can be more tax-efficient at higher profits, in exchange for more admin. Our business structures guide compares them.
Two ways to do this
Do it yourself, free. Plan walks you through the numbers side of going self-employed — what to charge, what you will keep, what needs setting aside — one short question at a time, in your browser. Do just this bit and stop there if that is all you need.
Or start with the tax. If the tax side is the bit you want handled, our self-employed tax guide covers Self Assessment, what you can claim and the deadlines — in the same plain English.