How To Setup A Sole Trader
Register as soon as you can after starting your business. At the latest, you should register by 5 October in your business’s second tax year.
If you start working as a sole trader between April 2014 to March 2015, you should register before 5 October 2015.
If you register later than this, you won’t get a penalty as long as you send your Self Assessment tax return and pay your bill on time.
How to register
This depends on your circumstances.
New sole trader who’s not sent tax returns before
Tell HM Revenue and Customs (HMRC) you want to be a sole trader by registering as a new business. You’ll register for Self Assessment tax returns and Class 2 National Insurance at the same time.
You’ll then be able to report your self-employment income through a tax return after the end of each tax year.
New sole trader who’s sent tax returns before
You may have sent Self Assessment tax returns before as an individual, eg for rental or investment income.
You now need register as self-employed and for Class 2 National Insurance using form CWF1. You can keep your existing Self Assessment account.
You need your 10-digit Unique Taxpayer Reference (UTR) from when you registered for Self Assessment, so HMRC can link your accounts.
You can find your UTR on previous tax returns, your online account or other documents from HMRC. If you can’t find it, call the Self Assessment helpline.
Former sole trader who wants to start up again
You need to reregister using form CWF1. You’ll need your UTR for the same reasons as new sole traders already in Self Assessment.
How long it takes
Allow 10 working days to complete the registration process because HMRC needs to post you an activation code. You’ll be prompted for this when you first log in to your online account (also known as a Government Gateway account).
Allow 21 days if you’re abroad.