How to Register as Self Employed UK While Keeping Your Full Time Job

When Does a Side Hustle Become Self Employment?

You can have a full time job and run a business on the side. Plenty of people do it. A graphic designer working in a Manchester agency who takes freelance projects in the evenings. A teacher in Bristol who sells handmade furniture on Etsy at weekends. A Leeds-based IT contractor who builds websites for local businesses after hours.

The key question is when HMRC expects you to tell them about it. And the answer depends on how much you earn and whether you're trading as a business or just making the occasional bit of cash.

If you sell a few old belongings on eBay or do a one-off favour for a neighbour for £50, that is not self employment. That is disposing of personal assets or casual income. HMRC does not need to know about it.

But if you regularly make items to sell, advertise your services, buy stock, or carry out work for multiple customers with the intention of making a profit, you are trading. And that means you are self employed. Even if your day job is your main source of income.

How to Register as Self Employed UK: The Exact Steps

Registering as self employed with HMRC is straightforward. You do it online through the Government Gateway. Here is the process step by step.

Step 1: Check if You Need to Register

You do not need to register if your self employed income is under £1,000 in a tax year. That is the trading allowance. It applies to casual earnings from self employment that are not regular or structured enough to count as a trade. If you earn £800 from ad hoc freelance work in a year, you do not need to tell HMRC.

But if your income is over £1,000, or if you are carrying on a trade in a regular and organised way even if your profit is under £1,000, you must register. The trading allowance is not a free pass to trade without registering. It is a tax exemption for small amounts of casual income.

If you are buying stock, invoicing customers, or running a website that takes orders, you are trading. Register. Even if your profit is under £1,000.

Step 2: Register for Self Assessment

You register by creating a Self Assessment account. Go to GOV.UK and search "register for Self Assessment". You will need your National Insurance number and your Government Gateway user ID. If you do not have a Gateway ID, you create one during the process.

The registration gives you a Unique Taxpayer Reference (UTR). This is your 10-digit tax reference number. Keep it safe. You will use it every year when you file your Self Assessment tax return.

If you are already registered for Self Assessment because of other income (rental income, for example), you do not need to register again. You just add your self employment income to your existing return. Use the SA103S (short) or SA103F (full) supplementary pages, depending on your turnover.

Step 3: Tell HMRC the Start Date

When you register, you tell HMRC the date you started trading. This is the date you first carried out work with the intention of making a profit. Not the date you registered. Not the date you got your first invoice paid. The date you started trading.

For a side hustle, that might be the day you launched your website, bought your first batch of stock, or carried out your first paid project. Be honest about the date. HMRC can check.

You must register by 5 October following the end of the tax year in which you started trading. If you started trading in June 2025, you must register by 5 October 2026. Miss that deadline and you risk a penalty.

Step 4: File Your Tax Return Every Year

Once registered, you file a Self Assessment tax return every year. The deadline is 31 January for online returns. You report your self employed income and expenses, and HMRC calculates the tax and National Insurance due.

Your day job income is already taxed through PAYE. Your side hustle income is taxed separately through Self Assessment. You pay income tax on your total income (day job plus side hustle profit) minus your personal allowance. And you pay Class 2 and Class 4 National Insurance on your self employed profits.

Class 2 NIC is £3.45 per week for 2025/26. But if your self employed profits are under £6,725, you do not pay Class 2. You can pay voluntarily if you want to protect your state pension entitlement.

Class 4 NIC is 9% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

Do You Need a Separate Bank Account?

Not legally. As a sole trader, your business and personal finances are the same legal entity. You can use your personal bank account for business transactions.

But practically, you should open a separate business bank account. It makes your bookkeeping much simpler. You can see your business income and expenses clearly without sifting through personal transactions. And if HMRC ever asks to see your records, a separate account makes the process painless.

Most high street banks offer sole trader accounts. Monzo, Starling, and Tide are popular options. They are free or low cost and take 10 minutes to open online.

National Insurance When You Have a Full Time Job and a Side Hustle

This is where it gets a bit nuanced. You already pay Class 1 National Insurance through your day job. That counts towards your state pension and other contributory benefits.

Your side hustle triggers Class 2 and Class 4 National Insurance on your self employed profits. But you do not pay Class 2 if your profits are under £6,725. And you do not pay Class 4 at all if your total profits are under £12,570.

There is no double counting. Your day job NI contributions are separate from your self employed NI contributions. Both count towards your NI record for state pension purposes, but you cannot exceed the maximum. So if your day job already gives you a full NI year, your self employed NI does not add anything extra to your pension. But you still have to pay it if your profits are above the thresholds.

One exception: if your self employed profits are under £6,725, you can apply for a Certificate of Small Earnings Exception (CF10) to avoid paying Class 2 voluntarily. But check your NI record first. If your day job does not give you a full year, you might want to pay Class 2 voluntarily to protect your state pension.

Expenses You Can Claim as a Side Hustle

You can claim the same expenses as any other sole trader. The rule is simple: the expense must be "wholly and exclusively" for your business.

Common expenses for side hustles include:

• Materials and stock
• Software subscriptions (Adobe Creative Cloud, QuickBooks, Xero, etc.)
• Website hosting and domain fees
• Advertising costs (Google Ads, social media ads)
• Travel costs for business trips (not commuting from home to your side hustle location)
• Professional fees (accountant, legal advice)
• Insurance (public liability, professional indemnity)
• Bank charges on your business account
• Use of home as office (a portion of your household bills based on the number of rooms or hours worked)

If you use something partly for business and partly for personal use, you apportion the cost. For example, if you use your phone 30% for business and 70% for personal, you claim 30% of the bill.

Keep receipts. HMRC can ask to see them up to 5 years after the tax year end. Digital copies are fine. Use Dext or a similar app to scan and store them.

What About VAT?

VAT registration is based on your total taxable turnover, not your profit. If your side hustle turnover exceeds £90,000 in any rolling 12 month period, you must register for VAT. That applies even if you have a full time job.

Most side hustles do not hit the threshold. But if yours does, you need to register and charge VAT on your invoices. You can also reclaim VAT on your business purchases.

If you are close to the threshold, speak to an accountant. There are legitimate ways to manage your turnover to avoid crossing it, but you must not artificially suppress it.

Common Mistakes People Make

The most common mistake is not registering at all. People assume that because their side hustle is small, HMRC does not need to know. That is wrong. If you are trading, you register. The £1,000 trading allowance is an exemption from tax, not from registration.

The second mistake is mixing up the trading allowance with the personal allowance. The trading allowance is £1,000 of gross income. Not profit. If you earn £1,200 and have £300 of expenses, you cannot use the trading allowance to cover the first £1,000 and then claim expenses on the remaining £200. You either use the trading allowance (and claim no expenses) or you claim actual expenses (and ignore the trading allowance). You cannot do both.

The third mistake is forgetting to tell HMRC when the side hustle stops. If you stop trading, you deregister from Self Assessment. Otherwise HMRC expects a return every year and will issue penalties for late filing.

Should You Set Up a Limited Company Instead?

For most side hustles, no. A limited company adds administrative overhead: annual accounts, confirmation statements, corporation tax returns, and director responsibilities. The cost and time rarely justify it unless your profits are substantial.

But if your side hustle grows to the point where you are earning over £50,000 profit consistently, a limited company might save you tax. Corporation tax is 19% to 25%, compared to income tax at 40% or 45% on high earnings. And you can pay yourself a mix of salary and dividends to minimise your tax bill.

If you are considering incorporating, read our guide on incorporation and business structure. It covers the pros and cons in detail.

For now, if your side hustle is under £50,000 profit and you have a full time job, stay as a sole trader. It is simpler and cheaper.

What Happens at the End of the Tax Year?

You file your Self Assessment tax return online by 31 January. You report your self employed income and expenses. HMRC calculates the tax and NI due. You pay the bill by 31 January as well.

Your day job tax is already handled through PAYE. Your side hustle tax is paid through Self Assessment. If your side hustle tax bill is over £1,000, HMRC may ask you to make payments on account. That means paying half of your expected tax bill by 31 January and half by 31 July the following year.

Payments on account catch people out. If your side hustle tax bill is £2,000 for 2025/26, you pay £1,000 on 31 January 2027 (balancing payment for 2025/26) and £1,000 on 31 January 2027 plus £1,000 on 31 July 2027 (first payment on account for 2026/27). Total due on 31 January 2027: £2,000. Plan for it.

Final Practical Advice

Start a spreadsheet or use accounting software from day one. FreeAgent and Xero both have free trials and are designed for sole traders. Record every transaction as it happens. Do not wait until January to sort out your records.

Set aside 20% to 30% of every side hustle payment in a separate savings account. That covers your tax and NI. When the tax bill arrives, you have the money ready.

If your side hustle grows to the point where it takes more than 10 hours a week, consider whether you want to keep your full time job. Some side hustles become main hustles. That is a lifestyle decision, not a tax one. But when it happens, your tax situation changes significantly. You will need to think about pension contributions, health insurance, and cash flow planning.

If you are unsure whether your side hustle counts as trading, or whether you need to register, speak to an accountant. Our services page covers how we help side hustle clients get set up correctly from the start.

For more detailed guidance on self employment tax returns, read our sole trader and self employment blog. It covers expenses, allowances, and common pitfalls in more depth.

And if you are based in Manchester, Birmingham, or Bristol, check our locations page to see if we have an office near you.