Self-employed starter hub
Going self-employed, side-hustling, or moving from PAYE to a limited company. This hub covers the first-year basics: registering with HMRC, the right tax-year cadence, what to put aside for tax and NI, and what changes when you cross the VAT threshold.
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The ordered steps
1. Register for Self Assessment in time
If you earn more than £1,000 from self-employment in a tax year, you must register by 5 October following the end of that tax year. Registering late triggers penalties. The first Self Assessment return is due by 31 January after the tax year ends (paper: 31 October).
2. Put aside tax and NI from day one
A rough rule for a sole trader on basic-rate income is to put aside around 25–30% of profit for Income Tax + Class 4 NI. The exact figure depends on your other income and student-loan plan — use the take-home calculator to refine it.
3. Keep records — and get ready for MTD ITSA
From April 2026 Making Tax Digital for Income Tax Self Assessment applies to sole traders and landlords with combined income above £50,000 — quarterly digital submissions plus an end-of-year statement. From April 2027 the threshold drops to £30,000.
4. Watch the VAT threshold
VAT registration is compulsory when your taxable turnover passes £90,000 in a rolling 12 months. You can voluntarily register below that — sometimes a useful move if your customers are themselves VAT-registered.
5. Decide on a pension structure early
Self-employed people miss out on auto-enrolment. A personal pension or SIPP can be set up cheaply and still attracts tax relief at your marginal rate. Even small monthly contributions compound powerfully over a working life.