✿Petal & Paper
Home · Buying guides · UK self-employed first year guide
Buying guide

Going self-employed in the UK: the practical guide to the first year

The first year of self-employment involves more admin than most people expect. Here is the practical guide.

Registration and the basics

Register as self-employed with HMRC at gov.uk/set-up-sole-trader within 3 months of your first trading day. You will be allocated a Unique Taxpayer Reference (UTR) and be required to submit a Self Assessment tax return each year (deadline: 31 January). Register for VAT if your turnover exceeds £90,000/year (2024 threshold) or voluntarily if your clients are VAT-registered businesses. Use our free self-assessment checklist and income tracker from day one.

Tax: set it aside from the start

HMRC will not send monthly reminders about your tax liability — it accumulates invisibly. Set aside 20–30% of every payment received into a dedicated tax savings account (basic-rate taxpayer: 20% income tax + 9% NI Class 4 = approximately 29% of profit above the personal allowance of £12,570). Pay twice per year (July and January). The Payment on Account system means the first year's bill can feel like a double payment — plan for this.

Insurance and professional obligations

Professional indemnity insurance protects against claims arising from your work (essential for consultants, designers, advisers). Public liability insurance is required if you work at clients' premises. Some clients will not engage you without proof of insurance. Freelance and self-employed insurance comparison sites (Simply Business, Qdos) provide quotes. Keep every receipt for allowable business expenses — HMRC allows deduction of expenses 'wholly and exclusively' incurred for business purposes.

Our picks compared

PickProductBest for
Top pick A4 heavyweight matte cardTax prep Check price →
Accounting FreeAgent Wave accounting self-employed UK freeBookkeeping Check price →
Insurance Simply Business professional indemnity insuranceBusiness insurance Check price →
Book The Freelance Bible Ali Raynor self-employed UKFreelance guide Check price →

As an Amazon Associate we earn from qualifying purchases. Prices shown on Amazon at time of click.

Frequently asked questions

Can I be employed and self-employed at the same time?
Yes — many people have an employment contract alongside self-employment income (a side business, freelance work, rental income). Report all income through Self Assessment. Your employer may have restrictions on outside work in your employment contract — check before starting any competitive or conflicting activity.
What expenses can a self-employed person deduct?
Business expenses 'wholly and exclusively' incurred for the business: equipment and tools, software subscriptions, professional fees, training directly related to the business, a proportion of home office costs (calculated by hours used or room proportion), travel to client sites (not home-to-office commuting). Keep receipts for everything.