You can start trading today without telling HMRC anything. Once your income from self-employment passes £1,000 in a tax year, that changes, and there is a deadline with your name on it.

The £1,000 trading allowance

If your gross trading income for the tax year is £1,000 or less, you usually do not have to tell HMRC about it at all. Gross means the money coming in before any expenses. You still need to keep records of it.

Over £1,000 and you have two choices. Deduct your actual expenses, or deduct the flat £1,000 trading allowance instead. You cannot do both. If your expenses are small, the allowance is often the simpler route; if they are larger, claim the real costs.

The dates that matter

• 5 October: tell HMRC you need a tax return, by registering for Self Assessment
• 31 October: paper tax return deadline
• 31 January: online return deadline, and the day the tax is due

Worked example. You start trading in July 2026. Your first tax year runs to 5 April 2027. You register by 5 October 2027. Your first online return and payment are due by 31 January 2028.

That gap is longer than people expect, and it is a trap. HMRC will not chase you in month one. The first you may hear about it is a penalty notice after the 5 October deadline has passed.

What it costs if you are late

Register after 5 October and leave tax unpaid at 31 January and you face a “failure to notify” penalty, worked out as a percentage of the tax you still owe. File the return late and the penalties run separately: an immediate £100, then £10 a day once you are three months late, and further charges at six and twelve months.

How to register

You register online through your Government Gateway account. HMRC then posts you a Unique Taxpayer Reference, the ten digit number you will use for every return. If it has not arrived and you are waiting, you can check HMRC’s “when you can expect a reply” page.

National Insurance, briefly

Registering also puts you in the National Insurance system. For 2026/27, if your profits are £7,105 or more, Class 2 contributions are treated as paid, which protects your State Pension record without costing you anything. Above £12,570 of profit you pay Class 4: 6% on profits up to £50,270, then 2%.

Sources

All pages checked 20 October 2026.

• Set up as a sole trader: https://www.gov.uk/set-up-sole-trader
• Tax-free allowances on property and trading income: https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income
• Self Assessment deadlines: https://www.gov.uk/self-assessment-tax-returns/deadlines
• Self Assessment penalties: https://www.gov.uk/self-assessment-tax-returns/penalties
• Register for Self Assessment: https://www.gov.uk/register-for-self-assessment
• Self-employed National Insurance rates: https://www.gov.uk/self-employed-national-insurance-rates

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