Sole traders and partners are classed as self-employed by HM Revenue and Customs (HMRC). This includes selling goods or services (‘trading’), unless you’re just selling a few unwanted items occasionally.
Running a business
You’re probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit (including through websites or apps)
Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.
You can be both employed and self-employed at the same time, eg if you work for an employer during the day and run your own business in the evenings.
Selling goods or services
You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.
What counts as trading
You’re likely to be trading if you:
- sell regularly to make a profit
- make items to sell for profit
- sell online, at car boot sales or through classified adverts on a regular basis
- earn commission from selling goods for other people
- are paid for a service you provide
What doesn’t count as trading
You’re probably not trading if you sell some unwanted items occasionally or you don’t plan to make a profit. You can’t use any losses you make as part of a hobby to reduce your tax bill.
Contact HMRC for advice if you’re not sure whether you’re trading.