Tag Archive for Sole trader

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Sole traders and VAT

by Henry Williams • February 27, 2026 • 0 Comments

By Henry Williams on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Whether or not you need to pay Value Added Tax (VAT) as a sole trader depends entirely on your taxable turnover. Basically, if at the end of any month your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days, you need to register for VAT. You must do so within 30 days of the end of the month you went over.

You can also voluntarily register for VAT even if your turnover is under the threshold. Some sole traders choose to do this so that they can claim back the VAT on goods and services purchased for their business or to avoid financial penalties from accidentally going over the threshold.

Below, we explain how to register for VAT as a sole trader, how much you need to pay, VAT rates, charging VAT to customers, and MTD for VAT.

Registering for VAT as a sole trader

You can register for VAT online with HMRC. Once approved, you should receive a unique VAT number relevant only to your business within a few weeks.

It will be provided

Hot Business News Today

Tax advantages of a limited company versus sole trader

by Haydn Rogan • October 20, 2025 • 0 Comments

By Haydn Rogan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Being a sole trader means that you run your own business as an individual and are essentially self-employed. This is the most popular way of trading in the UK, with 4.4m sole proprietorships recorded as of October 2025.

By contrast, a limited liability company is a separate legal entity to you, with separate finances.

Each option has its own advantages and disadvantages, and if you’re just starting out in business, you need to decide which works best for you.

Here, we look at some of the major differences in terms of legal liability, taxes and bureaucracy.

Also see: Should I go sole trader, partnership or limited company?

Liability

A key advantage of a limited company structure is that it ringfences your personal assets. If your business fails or is sued, you will only lose any investment in the business and won’t be personally liable for meeting charges such as litigation costs or damages from your own finances. Although, in some cases, lenders may require personal guarantees.

As a sole trader, you and your business are one single legal entity. You are personally liable for any debts and liabilities you incur in the running

Hot Business News Today

6 examples of sole traders

by Tim Adler • August 5, 2025 • 0 Comments

By Tim Adler on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

What are some examples of sole traders? A sole trader can do or be anything really – the key thing is that, legally, there is no distinction between you and your business when it comes to finances, assets and responsibility for debts and liabilities.

What’s great about being a sole trader is that it is the simplest business structure to register with HMRC and, unlike setting up a limited company, there’s no fee. You also have full control over the enterprise and get to keep all your own profits after tax.

This simple structure and setup lends itself to business ideas with relatively low start-up costs and barriers to entry. Nevertheless, a sole trader operation can be very lucrative and here are six great examples.

Personal trainer

Gardener

Hairdresser

Private chef

Photographer

Graphic designer

AI and sole tradersThe boom in accessible, powerful AI, like large language models (LLM) and photo and video generation software, has been something of a game-changer for sole traders. Firstly, because it’s democratising access to the tools, capabilities and the scale of production that would only have been accessible to larger teams or highly-skilled individuals. Secondly, because

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Best business bank accounts for sole traders

by Anna Jordan • June 4, 2025 • 0 Comments

By Anna Jordan on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

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Setting up as one of the UK’s 3.1 million sole traders, you may have lots of questions around which business bank account is best for you.

You will need to consider cost, free banking period (if there is one), overdrafts and integrations.

We’ll be looking some of the best business bank accounts on the market targeted specifically at sole traders.

Compare business bank accounts now – Easily find the top business bank accounts from a range of providers here.

Traditional banks

High street banks do offer sole trader accounts and they tend to have a free banking period, which is a huge bonus if your business is new and you’re trying to cut costs. Take a look at the summary below.

Bank/AccountFeaturesFree banking periodAccount fee thereafter

HSBC Kinetic• Make payments of up to £25,000 per day in-app
• Automatically categorised transactions to help monitor spending
• Credit card and savings account (subject to eligibility and application)
• Insights that could help you manage your money better12 months£6.50 a month

HSBC Small Business Banking Account • Loans from £1,000 to £25,000
• Arranged

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Reprieve for self-employed having to report tax quarterly

by Timothy Adler • September 24, 2021 • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

Ministers have bowed to pressure after complaints that rolling out Making Tax Digital to any self-employed person earning over £10,000 a year would be another administrative burden coming on top of coronavirus and the shaky recovery.

“The government recognises the challenges faced by many UK businesses and their representatives as the country emerges from the pandemic over the past year,” Lucy Frazer, newly appointed financial secretary to the Treasury, said in a written ministerial statement.

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

Hot Business News Today

Reprieve for self-employed having to report tax quarterly

by Timothy Adler • September 24, 2021 • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Millions of self-employed will not have to start reporting their tax income quarterly to the taxman from April 2023 as planned.

Bowing to pressure, ministers have postponed overhauling personal tax for the self-employed for another year, in what has been called the biggest shakeup in 25 years.

Making Tax Digital was scheduled to make 4.3m self-employed and small business owners keep digital records and report their income to HMRC every quarter rather than annually from April 2023.

Instead, the measures will now come into place in April 2024, the Government announced on Thursday.

Self-employed tax burden

HMRC is pushing for the self-employed to complete their tax returns every quarter to reduce the number of inaccuracies – either

Hot Business News Today

Setting up as a sole trader – a business is born

by James Johnson • September 9, 2021 • 0 Comments

By James Johnson on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Starting a new business is understandably an exciting and apprehensive time. First you have the business idea, perhaps carried out a little research on the demand for your product or service; one of the first decisions to make is what type of business structure to adopt. Setting up as a sole trader is a preferred option for many starting out.

The basic three options are sole trader, partnership or a limited company.

The most common form of business structure for start-ups in the UK is a sole trader, where you trade under your own or a business name. As a sole trader, the risks and rewards rest entirely with you.

>See also: Should I go sole trader, partnership or limited company?

Setting up as a sole trader

There are many ways for a sole trader to set up and start in business, from starting a trade, buying a franchise, taking a hobby to the next level, or inventing a new product or service. Successful businesses do, however, share common traits – a unique product or service or selling strategy.

Any new business owner will naturally be focused on establishing a customer

Hot Business News Today

Setting up as a sole trader – a business is born

by James Johnson • September 8, 2021 • 0 Comments

By James Johnson on Small Business – Advice and Ideas for UK Small Businesses and SMEs

The basic three options are sole trader, partnership or a limited company.

The most common form of business structure for start-ups in the UK is a sole trader, where you trade under your own or a business name. As a sole trader, the risks and rewards rest entirely with you.

>See also: Should I go sole trader, partnership or limited company?

Setting up as a sole trader

Any new business owner will naturally be focused on establishing a customer

Hot Business News Today

How to become a sole trader

by Small Business Team • August 19, 2021 • 0 Comments

By Small Business Team on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Setting up as a self-employed sole trader is the simplest way to start a business. Paperwork is generally minimal, accounting and record-keeping is fairly straightforward and the benefits of being your own boss are numerous.
When establishing a business on your own for the first time then, being a sole trader is the sensible legal entity to start.
How to become a sole trader
There’s not really a difference between being a sole trader and being self-employed. ‘Sole trader’ describes your business structure, while ‘self-employed’ is a way of saying that you don’t work for an employer or pay tax through PAYE. As a sole trader, you are the legal entity in your own right, employing people and entering into contracts. You have no limited liability; your own assets are at risk should the business fail.
Getting started
The first step to becoming a sole trader is to choose a name. Make sure you have chosen a name that’s not being used by any other business. If you do then they could stop you using it. With this in mind, it is worth considering registering your name as a

Hot Business News Today

Nearly 300,000 sole traders face increased tax bills

by Timothy Adler • August 9, 2021 • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

Nearly 300,000 sole traders face bigger tax bills than expected next year, following the government’s proposal to change the date small businesses report profits.

The move, which also affects partners in accountancy and law firms, would generate billions of pounds for the Treasury years before it would otherwise have received the money.

The changes to tax bills will also eat into the amount of working capital sole traders have for five years as they now have to pay more tax earlier.

>See also: Why the Government’s new insolvency bill is bad news for sole traders

A consultation and draft tax bills legislation published last month revealed plans to alter the 12-month period sole traders use to calculate profits, to bring everyone in line with either March 31 or the end of the tax year on April 5.

What this means is that the date sole traders have to pay their tax bills – which small businesses are currently able to defer by having a later date for their end-of-accounting year – will be brought forward.

According to the Financial Times, the measure is expected to affect 280,000 sole traders, based on

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