Registering, National Insurance, VAT, Making Tax Digital and the traps of the first year — written for people on site, not in an office.
NINO guide · updated 25 September 2026
Working as a sole trader is the simplest route and the one most tradespeople start with: no company, no Companies House filings, but no separation between you and the business either — the debts are yours personally. A limited company gives you that separation and costs more to run. Which one suits you depends on your numbers and your risk, and it is the cheapest question an accountant will ever answer for you.
Either way, you register with HMRC for Self Assessment, and you do it once you start trading rather than once the money arrives.
If you work in construction — and plumbing, electrical work, heating and general building all count — there is a second scheme on top: the Construction Industry Scheme. If you are subcontracting for another firm it changes what actually lands in your bank, so read that one before your first invoice.
Income Tax. On your profits — what you bill minus what you legitimately spend on the business. It is settled through Self Assessment, and once your bill is big enough HMRC will also ask for payments on account: two advance instalments towards next year's tax. The first year that happens is a nasty surprise if nobody warned you, because it lands on top of the bill you already owe.
National Insurance. Since 6 April 2024, Class 2 is no longer compulsory for self-employed people with profits above the Lower Profits Limit, and they keep their entitlement to the State Pension. Class 4 is still charged on profits above a threshold. The rates and thresholds move every year — take them from gov.uk, not from a forum.
VAT. Only once you pass the registration threshold, currently £90,000 of VAT-taxable turnover over a rolling twelve months. Below that you can still register voluntarily, which is often worth doing if you buy a lot of materials and your customers are businesses.
Note what is not on this list: no monthly fixed social security charge like the ones in Spain or Portugal. In the UK, when you earn nothing, you pay nothing.
Making Tax Digital for Income Tax replaces the single annual return with digital record keeping and quarterly updates to HMRC. The dates are set by gross income — turnover, not profit:
Gross income over £50,000 on your 2024/25 return.
Gross income over £30,000 on your 2025/26 return.
Gross income over £20,000 on your 2026/27 return.
The practical consequence: a tradesperson turning over more than £50,000 is already in it. Keeping records on paper or in a shoebox stops being an option.
The tax comes later than the money. You trade all year, and the bill arrives the following January. Whatever is in the account is not all yours.
Payments on account double the first real bill. Nobody expects it the first time.
Expenses you do not record do not exist. Materials, fuel, tools, insurance, phone, accountancy: every receipt that goes missing is money you are taxed on without ever having kept it.
And the hourly rate is usually wrong. If tax, insurance, the van and the empty days are not inside your price, you are working to pay for them. How to work it out properly: how to write a quote.
This guide is general information, not tax advice. Rules and figures change every year and your situation may differ: check with your accountant or on gov.uk.
Once you are trading as a sole trader you register for Self Assessment with HMRC. The usual deadline is 5 October following the end of the tax year in which you started, but do not leave it to the wire — check the current deadline on gov.uk.
Since 6 April 2024 self-employed people with profits above the Lower Profits Limit no longer have to pay Class 2 and still build up their entitlement. Class 4 is still due on profits. The thresholds and rates change each year, so take them from gov.uk rather than from memory.
Once your VAT-taxable turnover goes over the registration threshold — currently £90,000 over a rolling 12 months — or if you expect to pass it in the next 30 days. You can also register voluntarily below it, which can make sense if most of your customers are VAT registered themselves.
It replaces the once-a-year return with digital record keeping and quarterly updates. It starts in April 2026 for self-employed people with gross income over £50,000, April 2027 over £30,000, and April 2028 over £20,000. It is based on gross income — turnover — not profit.
NINO is a tool for self-employed tradespeople: you build the quote on site, the customer gets a professional PDF over WhatsApp, and customers, appointments and documents stay in one place. You can start free, with no card.
See also: all guides · NINO in your city.