Sole traders must contact HMRC for self assessment registration and maintain accurate accounting / bookkeeping records, but they don’t have to register the company with Companies House.
As a sole trader you will have to pay income tax and file a self-assessment tax return with HMRC every tax year. This blog gives you more information about registering as a sole trader and being self employed, filing tax returns and the tax you will have to pay.
What’s the difference between a sole trader and self-employed?
Not all self-employed people are sole traders. But if you operate your business as a sole trader you are classed as a self-employed person and will need to submit a HMRC self assessment return each year.
If you’re self-employed but own a business as a business partnership or a limited company, you’re not classed as a sole trader.
How do you register for self assessment?
There are different ways to register for HMRC self assessment depending on if you are self-employed, not self-employed or registering a partner or partnership.
How you register as self-employed will depend on if you have sent tax returns previously to HMRC.
If you have not filed a tax return before
- Register for Self Assessment and Class 2 National Insurance through your business tax account. You’ll need a Government Gateway user ID and password to sign in. If you do not have a user ID for a business tax account, you’ll be able to create one.
- You’ll receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re abroad). You’ll need your UTR to file a return.
- You’ll receive a reminder letter or email telling you to complete a Self Assessment tax return before it’s due.
You can file your tax return any time before the deadline.