When Do I Need to Register with HMRC After I Start Trading

Introduction

When you begin trading, one of your first legal obligations is to inform HMRC. Registering ensures your income is recorded correctly and that you pay the right amount of tax. Failing to register on time can result in penalties, so it is important to understand the deadlines and process that apply to your business structure.

This article explains when registration is required, how to do it, and what to expect in your first year of trading.

What does “starting to trade” mean

HMRC defines trading as carrying out a business activity with the intention of making a profit. This can include selling products, offering services, or even generating income through freelancing.

Trading starts from the point you begin carrying out these activities, not necessarily when you first receive payment. For example, if you start providing paid design work or selling goods online, you are trading even if you haven’t yet been paid.

Your registration deadline is based on this start date.

If you are a sole trader

Sole traders must register with HMRC for Self Assessment once they begin trading. You are considered self-employed as soon as you start working for yourself, even part time or as a side business.

Registration deadline

You must register with HMRC by 5 October following the end of the tax year in which you started trading. The UK tax year runs from 6 April to 5 April.

For example, if you started trading in June 2024, this falls within the 2024/25 tax year. You must register by 5 October 2025.

If you register after this date, HMRC may charge a penalty, even if you have not made much profit.

How to register

You can register online through HMRC’s Self Assessment system. Once complete, HMRC will send you a Unique Taxpayer Reference (UTR) and instructions to create your online tax account. You will use this to submit your annual Self Assessment return and pay any tax owed.

If you have previously filed a Self Assessment tax return (for example, from freelance work), you only need to update your details rather than register again.

When to pay tax

Your first tax return is due by 31 January following the end of the tax year you started trading. For instance, if you began in June 2024, your first return covers the year ending 5 April 2025 and must be submitted by 31 January 2026.

You pay income tax and National Insurance on your profits, and if your tax bill exceeds £1,000, HMRC may require advance payments for the next year.

If you are in a partnership

Partnerships must register both the partnership and each individual partner with HMRC. The partnership registration confirms the business name and trading start date, while each partner registers separately for Self Assessment.

The registration deadline is the same as for sole traders: 5 October following the end of the tax year in which trading began.

Once registered, the partnership must file a partnership tax return each year, and each partner must report their share of the profits on their own Self Assessment return.

If you have a limited company

The process is different for limited companies. When you incorporate a company with Companies House, HMRC is automatically notified. However, you must still register for corporation tax within three months of starting to trade.

Trading starts when your company begins business activity, such as buying, selling, or advertising services. Simply registering the company does not mean trading has begun.

For example, if your company was formed on 1 March but does not start trading until 1 June, you must register for corporation tax by 1 September.

HMRC will send your company a Unique Taxpayer Reference (UTR) shortly after incorporation. You will need this to complete registration online.

Other registrations to consider

VAT registration

If your taxable turnover exceeds £90,000 in any rolling 12-month period, you must register for VAT. You can also register voluntarily before reaching this threshold if you want to reclaim VAT on purchases or improve your business image.

Once registered, you must charge VAT on taxable sales, submit VAT returns (usually quarterly), and pay any VAT owed to HMRC.

PAYE registration

If you plan to pay employees or take a salary as a company director, you must register as an employer with HMRC before your first payday. This allows you to operate PAYE and deduct income tax and National Insurance from wages.

PAYE submissions must be filed on or before each payday, and payments are due by the 22nd of the following month if paying electronically.

Penalties for late registration

Failing to register with HMRC on time can result in fines. The penalties vary depending on how late you are, but even short delays can attract a penalty if HMRC believes it was deliberate.

For sole traders and partnerships, the fine is typically a percentage of the tax owed. For limited companies, failure to register for corporation tax on time can result in additional interest and penalties when you eventually submit your tax return.

Registering promptly ensures you stay compliant and gives you access to your online tax account for managing records, returns, and payments.

Practical tips for getting started

Mark your start date: Keep a record of when you began trading. This determines all your registration deadlines.

Register early: Don’t wait until the deadline. It can take time to receive your UTR and set up your online account.

Keep good records: Record income, expenses, and receipts from day one. This makes tax returns easier later.

Use accounting software: Digital systems such as Xero or QuickBooks simplify record keeping and help track important dates.

Seek professional advice: An accountant can help you register correctly, set up bookkeeping systems, and make sure you claim all allowable expenses.

Common mistakes to avoid

Assuming you only need to register once you make a profit. Registration is required as soon as you start trading.

Forgetting to register a partnership as a separate entity from the partners.

Waiting until your first tax return is due before registering.

Confusing the date of incorporation with the date trading actually begins.

Avoiding these mistakes saves time, prevents penalties, and ensures a smooth start with HMRC.

Conclusion

The timing of your registration with HMRC depends on your business structure, but one rule applies to everyone: register as soon as you start trading. Sole traders and partnerships must register by 5 October following the end of their first tax year, while limited companies must register for corporation tax within three months of trading.

By understanding these deadlines and keeping accurate records from the beginning, you can stay compliant, avoid penalties, and build a strong financial foundation for your business.