When Do I Need to Register My Business with HMRC?

When Do I Need to Register My Business with HMRC?

You’ve decided to go self-employed, launch a side hustle, or maybe turn that hobby into something that actually pays. Brilliant. But now the adulting kicks in — and one of the first questions is when to register with HMRC. It’s not the most thrilling part of starting a business, but it’s definitely one of the most important. Here’s how it works, when it needs doing, and what happens if you leave it too late.

What Does Registering with HMRC Actually Mean?

Registering with HMRC means officially telling the UK tax authority that you’ve started a business and intend to earn income outside of traditional employment. For most people, that means signing up as a sole trader, but it can also mean forming a limited company, joining a partnership, or becoming VAT registered, depending on your setup.

The moment you start making money on your own — whether that’s selling online, freelancing, running a service, or renting out a property — you’re operating as a business in HMRC’s eyes. Even if it’s just a few hundred quid here and there, once it crosses a certain line, registration becomes a must.

When Do You Actually Need to Register?

If you’re a sole trader, you need to register with HMRC by 5 October in your business’s second tax year. For example, if you start earning self-employed income in June 2025, you must register by 5 October 2026. That gives you time to prepare for your first Self Assessment tax return, which is due the following January.

But let’s not sugar-coat it: don’t wait that long. As soon as you know you’re earning regular income, it's best to register promptly. The £1,000 trading allowance lets you earn up to that amount in a tax year without needing to register, but anything over that and you’re into HMRC territory.

If you’re starting a limited company, you’ll register with Companies House first, and HMRC will usually be notified automatically — but you’ll still need to set up things like Corporation Tax, PAYE (if you have employees), and potentially VAT if your turnover hits the threshold.

How Does It Work?

For sole traders, registration is done online through HMRC’s website. You’ll get a Unique Taxpayer Reference (UTR), which is your ID for all things tax-related. You’ll then need to file a Self Assessment tax return each year, even if you’ve made no profit.

For limited companies, the process starts at Companies House. Once your company is formed, HMRC will send you a letter within a couple of weeks asking you to register for Corporation Tax. Ignore this, and HMRC won’t be shy about following up.

If you’re VAT registered, or you’re voluntarily registering before hitting the threshold, you’ll also need to set that up — usually when your turnover hits £90,000 in a rolling 12-month period.

Possible Advantages of Registering Early

Registering early avoids a lot of hassle later on. It means you’re in the system, your deadlines are clear, and you won’t get any surprise letters from HMRC asking why you’ve been ghosting them. It also allows you to claim business expenses and stay on top of your finances from day one.

For limited companies, early registration and setup also mean you’ll look more professional to clients, banks, and suppliers. Nothing says "serious business" like an official registration and a clean tax record.

Possible Disadvantages of Leaving It Too Late

Missing the registration deadline can lead to penalties. If you don’t register for Self Assessment by 5 October after the end of the tax year in which you started trading, you could be fined. And the longer you leave it, the worse it gets.

Even if you’re not fined, you’ll be left scrambling to meet tax return deadlines — or worse, trying to make sense of a year’s worth of receipts with two days to go. It’s stressful, unnecessary, and completely avoidable.

Plus, if you’re VAT-eligible and don’t register on time, HMRC can charge you the VAT you should have collected, even if you didn’t. That’s a fun bill to receive.

What Counts as “Trading” in HMRC’s Eyes?

You don’t have to be earning thousands to be considered in business. HMRC defines trading broadly — if you’re selling goods or services for profit, even casually, you might be classed as self-employed. Selling crafts on Etsy, doing freelance work, flipping second-hand items online, or charging for lessons all count. The minute you intend to make a profit — not just cover your costs — you're treading into taxable territory.

What Happens If You Miss the Deadline?

If you miss the 5 October deadline for registering as a sole trader and end up late filing your tax return, HMRC may fine you. The fine starts at £100 and can increase depending on how late you are and whether any tax is owed. You might also lose out on the chance to claim certain expenses or allowances for that tax year if your records are incomplete or submitted late.

What If You're Not Sure You’ll Earn Over £1,000?

If you're testing the waters with a new side gig and unsure whether you’ll make more than £1,000 in the tax year, you don’t have to register straight away. The trading allowance lets you earn up to £1,000 without telling HMRC or paying tax on it. But if you end up going over — even by a few quid — you’ll need to register and report the full amount, not just the bit over the threshold.

Can You De-Register if You Stop Trading?

Yes — if your business stops trading or you take a break, you can tell HMRC and de-register as self-employed. Just be aware that you still need to complete a final tax return to declare your income up to that point. Don’t just disappear; HMRC tends to notice.

What About Registering as an Employer?

If you plan to hire someone — even just one part-time employee — you must register as an employer with HMRC before their first payday. This applies even if the employee is your mate helping out on Saturdays. You’ll need to operate PAYE, deal with national insurance, and keep proper records

In Summary

You need to register your business with HMRC when you start earning more than £1,000 a year from self-employment or other non-employment income. Sole traders must register by 5 October in their second tax year, and limited companies register as soon as they incorporate. Waiting too long can mean missed deadlines, fines, and a world of paperwork pain. So if you’ve started making money, get yourself registered — your future self (and your accountant) will thank you.