Your first year self-employed: tax, step by step
Does MTD apply to you yet?Going self-employed involves less tax admin than people fear, but the deadlines are unforgiving and the first bill has a sting in it. Here's the whole first year in order, using a plumber who starts trading in June 2026 as the example.
The first-year timeline
| When | What happens |
|---|---|
| June 2026 | Start trading. Pick a name, or just use your own. Start keeping records immediately. |
| 5 April 2027 | The 2026-27 tax year ends. Your first year's profit now has a shape. |
| By 5 October 2027 | Deadline to register for Self Assessment for the year you started. Register late and there can be a penalty. |
| After registering | Your UTR, a 10-digit Unique Taxpayer Reference, arrives from HMRC. You file with it every year. |
| By 31 January 2028 | First tax return due, and the first payment with it. |
Registering
You must register for Self Assessment as a sole trader once you earn more than £1,000 in a tax year, which runs 6 April to 5 April. Registering early is allowed and gets the UTR wait out of the way. There's no separate company to create and nothing to renew: sole trader is the default legal shape of working for yourself.
Records from day one
The habit that makes everything else easy: every business transaction recorded with its amount, date and category, and kept for at least 5 years after the filing deadline. Do it from the first week, when there are nine transactions, and it's painless. Reconstruct it in January from a bank statement and a carrier bag, and it's a weekend you won't get back. The records guide has the detail.
The bill nobody warns you about
Your first Self Assessment bill can be 150% of the tax you owe. Once the bill passes £1,000, HMRC also collects two advance instalments towards the following year, the first of them on the same 31 January. A £4,000 first-year bill becomes £6,000 due in one day. It's not extra tax, just next year's arriving early, but knowing about it a year in advance is the difference between a plan and a panic. The full mechanics are in payments on account, explained.
Quick answers
What's a UTR?
Your Unique Taxpayer Reference, a 10-digit number HMRC sends after you register. You need it to file, so keep it somewhere that isn't a drawer.
I earn under £1,000 on the side. Do I need to do anything?
The first £1,000 of self-employment income in a tax year is tax free under the trading allowance, and below it you don't normally need to register. Cross it, and registration is due.
When does Making Tax Digital apply to me?
Once your qualifying income crosses the thresholds: over £50,000 from April 2026, over £30,000 from 2027, over £20,000 from 2028. New traders have time, but the record-keeping habit is worth building from day one. See the full MTD guide.
Do I need to sort my own National Insurance?
No arranging needed: HMRC works it out from your return. With profits of £7,105 or more your record is protected without paying Class 2, and Class 4 is added to the bill automatically.
Get all of this handled for you
Snap receipts as you get them. Drive like you always do. Invoice from your phone. SoleTax turns all of it into MTD-ready digital records, and shows the tax building as you go. 14 days free, no card needed.
Join the betaSources: gov.uk, set up as a sole trader, register for Self Assessment, Income Tax rates, and self-employed National Insurance. Checked on 4 July 2026.