If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed - even if you haven’t yet told HM Revenue and Customs (HMRC).
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, for example if you work for an employer during the day and run your own business in the evenings.
You can check whether you’re self-employed:
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.
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
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.
What you need to do
You’ll need to register for Self Assessment if any of the following apply:
- you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
- you need to prove you’re self-employed, for example to claim Tax-Free Childcare
- you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits
You must also follow certain rules on running and naming your business.
If you don’t need to register, you can still make voluntary Class 2 National Insurance payments - for example to make sure you get the full State Pension.
Other ways to work for yourself
There are other business structures apart from being a sole trader. For example, you can:
Get help with your business
You can get help with setting up or growing your business, for example with funding your idea.