The short version
- RegisterSelf Assessment with HMRC once you earn over £1,000 from trading.
- DeadlineBy 5 October after the end of the tax year you started.
- CISRegister as a subcontractor so contractors deduct 20%, not 30%.
- Must-have insurancePublic liability. Employers' liability if you take anyone on.
- PricingWork out your day rate from your real costs, not what you hope.
Going self-employed means more control and usually more money, but also tax, paperwork and quieter weeks to plan for. Here's what to sort out, in order.
1. Register with HMRC
As a sole trader you must register for Self Assessment once your trading income goes over the £1,000 trading allowance in a tax year. The deadline is 5 October after the end of the tax year you started trading. Register online through GOV.UK with your National Insurance number, and you'll get a Unique Taxpayer Reference (UTR) by post.
Set money aside from day one. No one takes tax out for you. Many people move a quarter to a third of every payment into a separate account.
2. Register for CIS
If you work for builders or main contractors, the Construction Industry Scheme (CIS) applies. Contractors take tax off your labour before paying you:
| Your status | Deduction |
|---|---|
| Registered subcontractor | 20% |
| Not registered | 30% |
| Gross payment status | 0% |
Registering is free, and it moves you from 30% to 20%. The deductions count towards your tax bill at the end of the year. Once you have a good track record, you can apply for gross payment status and be paid in full.
3. Records and Making Tax Digital
Keep every receipt and invoice from the start. Making Tax Digital for Income Tax applies to self-employed income over £50,000 from April 2026, £30,000 from April 2027, and is planned to drop to £20,000 from April 2028. See the best accounting software for tradespeople.
4. Get insured
Public liability insurance covers you if you damage property or injure a member of the public. It isn't a legal requirement, but most contractors and many customers will ask for it. Employers' liability is a legal requirement the moment you employ someone. Read public liability insurance explained.
5. Price your first jobs
Add up your yearly costs
Van, fuel, insurance, tools, phone, accountant, training, and the tax you'll owe.
Be honest about billable days
After holidays, bad weather, quotes and quiet spells, many trades bill far fewer than 260 days a year.
Set your day rate
Divide your target income plus costs by your realistic billable days. That's your floor, not your ceiling.
Price materials properly
Add a margin for the time spent buying and collecting them.
Put it in writing
A simple written quote with what's included, and when you'll be paid, avoids most arguments.
Quick answers
Do I need to register as self-employed straight away?
You can start trading straight away, but must register for Self Assessment once you go over £1,000, by 5 October after the tax year you started.
Can I be employed and self-employed at the same time?
Yes. Lots of tradespeople do side work while employed. The same registration rules apply to the self-employed part.
Should I set up a limited company?
Most people start as a sole trader because it's simpler. Speak to an accountant once your profits grow.
Is CIS registration compulsory?
No, but without it contractors deduct 30% instead of 20%.