What is a sole trader, and am I one as a tradesperson?

A sole trader is a self-employed person who runs a business on their own, with no company. In 2026, many self-employed plumbers, electricians, builders and decorators are sole traders, registered with HMRC for Self Assessment.

GOV.UK calls a sole trader "the simplest business structure to set up and keep records for". You and the business are not separate in law: you keep all the profits after tax, and you are personally responsible for all of the business's debts. The points below follow GOV.UK as checked on 19 October 2026.

Sole trader, limited company or employee

Our guide to sole trader or limited company for a tradesperson compares the two in more detail.

Am I a sole trader?

GOV.UK says a person is self-employed if they run their business for themselves and take responsibility for its success or failure. It says someone is probably self-employed if they are self-employed for tax purposes and most of these are true:

• they put in bids or give quotes to get work
• they are not under direct supervision when working
• they submit invoices for the work they have done
• they are responsible for paying their own tax and National Insurance
• they do not get holiday or sick pay when they are not working
• they work under a contract for services that calls them self-employed or an independent contractor

If that describes you, and you have not set up a limited company or gone into partnership with someone, you are a sole trader. That includes a self-employed subcontractor under the Construction Industry Scheme (CIS), whose deductions count towards their own tax bill. If you are unsure about your status for tax, GOV.UK links to HMRC's online check of employment status.

What being a sole trader means for tax

• Registering. You can start trading straight away. You must register for Self Assessment as a sole trader if your gross income from self-employment, before expenses, is more than £1,000 in a tax year, which runs from 6 April to 5 April. GOV.UK also says you must register if you need to register for CIS as a subcontractor, want to pay voluntary Class 2 National Insurance, or need to prove you are self-employed. At £1,000 or less, the trading allowance usually means you do not need to tell HMRC, unless you want to claim a loss, pay voluntary Class 2, or the income is from your employer or a company or partnership connected to you.
• Records. GOV.UK says that when you start trading you must keep records of your income and costs.
• Tax on profit. Income Tax is charged on your profit, which is your income minus allowable expenses, and Class 4 National Insurance is 6% on profits between £12,570 and £50,270 and 2% above in 2026-27.
• Making Tax Digital. If your qualifying income, which is your self-employed and property income before expenses, was over £50,000 on your 2024-25 return, you started on 6 April 2026. Over £30,000 on your 2025-26 return means starting on 6 April 2027.
• VAT. You must register for VAT if your taxable turnover goes over £90,000 in any 12 months, or you expect it to go over £90,000 in the next 30 days alone.

Our guide to National Insurance for self-employed trades has the rates in full.

Naming your business

You can trade under your own name, such as "Sam Jones", or choose a business name, such as "Jones Plumbing". GOV.UK says a sole trader's business name cannot include "limited", "Ltd", "LLP" or "plc", cannot be offensive, and cannot be too similar to another company's trademarked name. If you use a business name, your invoices and letters must show your own name as well.

What this means for you

If you work for yourself as a tradesperson and have no company and no business partner, you are almost certainly a sole trader already, whether or not you have registered. The step that matters is registering with HMRC: you must do this once you take more than £1,000 in a tax year (before expenses), or straight away if you need to register as a CIS subcontractor, so your tax return and any CIS refund can be dealt with.

This is general information to help you understand the rules. It isn't tailored to your circumstances, so check your own position before acting on it.

Steps to start as a sole trader

1. Check that you work for yourself, using the signs above or GOV.UK's online check.
2. Choose whether to trade under your own name or a business name.
3. Start keeping records of every payment in and out from your first job.
4. Register for Self Assessment as a sole trader once you take more than £1,000 in a tax year (before expenses), or before you register for CIS.
5. If you work in construction for contractors, register for CIS as a subcontractor.
6. Check when Making Tax Digital starts for you.

Use the free MTD check to see when Making Tax Digital starts for you, our guide on how to register as a sole trader with HMRC, and the trades section for more guides on tax for trades.