How do I register as a sole trader in the UK?

If you want to set up a new company in the UK, there are a few options. You can register a company name, or register with one or more other people as a partnership.

But if you just want to be able to earn money in your own right as an individual, one of the easiest options is to register as a sole trader in the UK.

To do this, first you have to tell HM Revenue & Customs – the UK’s tax office – that you will be paying your income tax based on your individual earnings in future years.

And that’s it. In principle, as soon as you have informed HMRC that you want to pay tax as a sole trader, you have done everything you need in order to register as a sole trader in the UK.

So what else might you need to know?

Keeping records

You will need to keep accurate accounting records to show what you earn and what you spend on business expenses – the difference between these is your profit, which is what you will be charged tax on.

It’s not enough just to list all the things you buy for your business, as you might be asked to prove this information in the future, so make sure you get a till receipt for any business spending, and keep all of your receipts well organised for up to five years afterwards.

There are two ways to keep accounting records as a sole trader in the UK. The easiest is to record income when people actually pay you, and this is usually acceptable for anyone earning up to £100,000 a year.

You can also use traditional accounting though, and in that case you record income when you send out the invoice, rather than when you actually get paid.

If you’re not sure which method you should use, you should consider speaking to an accountant or a financial advisor.

Managing your finances

As a sole trader, you might let people pay you directly into your personal current account – and there’s nothing wrong with doing this, as ultimately you get to keep all of your profits, and you are responsible for any losses you make in business too.

But if you are new to the UK, you might have money coming in from other places too, such as friends and family back home who are helping you out with your living expenses until you get settled.

That can make it difficult to track your personal and professional income separately – so you could consider setting up a separate business account.

With an Arro Business Account you get a separate account number for professional invoices and a Business MasterCard® debit card, which can look more professional when buying things for your business.

You can have an Arro Business Account as a sole trader or as a representative of a registered company or partnership, and you can have an Arro Personal Account in your own name at the same time too.

Together they give you a good way to manage personal and professional income and spending separately, making it easier to see how profitable your business is at any time, and helping you to work out how much tax you will owe at the end of the year.

Get an Arro Personal or Business Account

You can apply for an Arro Personal Account or an Arro Business Account in just three minutes with basic information about yourself.

All we need is:

  • Name.
  • Date of birth.
  • UK address.
  • Contact details.

For an Arro Business Account, we also ask for your company name, but the account is available to sole traders too.

In either case, you must be over 18 and have a current UK address, so please make sure you arrive in the UK before you apply.

New to the UK?

That’s no problem. You can apply as soon as you arrive. We use online databases to check your ID – part of the routine checks carried out by all account providers to help tackle fraud – and we do not need to access your credit file.

We can verify ID from 160 different countries and you usually will not need to send us any paperwork yourself, it’s all done automatically online – and we guarantee to accept you if we can, subject to the basic requirements listed above and our Fair Fit test of eligibility.