UK Going Self-Employed Checklist (2026/27)
UK going self-employed checklist 2026/27: HMRC Self Assessment registration within 5 October of second tax year, Class 2/4 NI registration, professional indemnity + public liability insurance, business bank account, accounting software (FreeAgent/Xero/QuickBooks), record keeping, when to register for VAT (£90k), Apprenticeship Levy for solo traders.
Complete setup checklist
| Area | Action | Priority |
|---|---|---|
| HMRC registration | Register for Self Assessment by 5 Oct of second tax year after starting. £100+ penalty for late registration. Form CWF1 via gov.uk for sole traders (SA1 is the wrong form - that one is for SA-without-self-employment cases like landlords + high earners) | Day 1 |
| NI registration | Class 2 NI credit given automatically if profits exceed Small Profits Threshold £7,105 (2026/27); voluntary £3.65/wk only if profits below SPT and you want to keep State Pension years building. Class 4 NI 6%/2% bands mandatory. CWF1 registers you for both SA + NI together | Day 1 |
| Business name | Sole trader can trade in own name OR a business name. Must NOT be misleading or contain restricted words. Not registered like company names; check no trademark conflict | Week 1 |
| Bank account | Separate business bank account strongly recommended (HSBC + Starling + Tide free). Helps record-keeping + can simplify SA + reduces personal account risk | Week 1-2 |
| Professional Indemnity Insurance | For service providers (consultants, designers, IT, accountants, marketing) - typically £100-£500/yr for £1-2m cover. Hiscox + AXA + Direct Line all offer | Week 1-2 |
| Public Liability Insurance | For client-facing service (anyone visiting your premises or you visiting theirs). £50-£200/yr for £2-5m cover. Often bundled with PI | Week 2 |
| Accounting software | FreeAgent (free for some banks), Xero (£14+/mo), QuickBooks (£12+/mo), Crunch (£30+/mo). Required for MTD ITSA from April 2026 if turnover > £50k | Week 2-4 |
| Record keeping system | Receipts (digital copies acceptable), invoices, mileage log (55p/25p rates), home office records. Keep for 6 years (Section 12B TMA 1970) | Day 1 ongoing |
| VAT registration | Required if turnover hits £90,000 (2026/27) in any 12-month rolling window. Voluntary registration possible below threshold for input VAT reclaim | When approaching £90k |
| Contract templates | Use legal-template service (LawDepot, Rocket Lawyer £30-£50/template) or solicitor-drafted master template (~£500). T&Cs, contracts, late payment clauses | Week 3-4 |
| Pension setup | Personal Pension or Self-Invested Personal Pension (SIPP) (no employer auto-enrol). Contribute up to £60k/yr AA + 20% tax relief. Strongly recommended | Month 1-3 |
| Emergency fund | 6-12 months expenses essential (no SSP, irregular income). See our guide | Month 1-6 |
| Income protection insurance | No SSP / Statutory Sick Pay for self-employed. Income Protection (IP) policy £30-£100/mo covers loss of income from illness / injury. LV= + Aviva + Royal London market leaders | Month 1-3 |
Related guides
- UK Sole Trader vs Limited Guide - structure decision.
- UK Class 2 + Class 4 NI 2026/27 - NI mechanics.
- UK MTD ITSA Penalty Points 2026/27 - April 2026 compliance.
- UK Self-Employed Expenses Checklist 2026/27 - allowable expenses.
- UK SA Deadlines + Penalties 2026/27 - timing rules.
Frequently asked questions
When do I need to register with HMRC?
By 5 October of your second tax year after starting self-employment. So if you started self-employed during 2026/27 tax year, register by 5 October 2027. Late registration: £100 fixed penalty + potentially higher penalties if you owe tax. Easier to register IMMEDIATELY when you start - via gov.uk/register-for-self-assessment. Use form CWF1 (online) - this registers you for SA + Class 2 / 4 NI as a sole trader. Do NOT use SA1 (that form is for SA-without-self-employment cases). HMRC sends Unique Tax Reference (UTR) within 10 days. Use UTR for first Self Assessment + thereafter.
What's the Class 2 vs Class 4 NI situation?
Major April 2024 reform: Class 2 NI is no longer mandatory. Self-employed with profits ABOVE the Small Profits Threshold (£7,105 in 2026/27) get the qualifying year of State Pension AUTOMATICALLY without paying. Self-employed with profits BELOW the SPT can still pay voluntary Class 2 at £3.65/week (~£190/year) if they want to keep building State Pension years (Maternity Allowance + Bereavement benefit access also requires Class 2). Class 4 NI remains mandatory at 6% on profits £12,570-£50,270 + 2% above £50,270 (2026/27). Self Assessment calculates + collects Class 4. See our Class 2/4 NI guide.
Should I trade as sole trader or limited company?
Common dilemma. Sole trader: Simpler, less admin, lower fees (~£200/yr accountant), unlimited personal liability for business debts. Income taxed at personal rates (20%/40%/45% IT + 6%/2% Class 4 NI). Best for: low-risk service businesses, profits under £50k, side hustles. Limited company: Limited liability, separate legal entity, optimal salary + dividend extraction (potentially tax-efficient), higher admin (~£1k+/yr accountant), Companies House filings. Best for: profits £40k+ where salary + dividend split tax-saves; businesses with employees or significant liability. See our sole trader vs limited guide.
What insurance do I actually need?
(a) Professional Indemnity Insurance (PI): covers claims for professional negligence / errors. Essential for consultants, designers, accountants, IT, marketing. £100-£500/yr for £1-2m cover. (b) Public Liability Insurance: covers third-party injury / property damage. Essential if clients visit your premises or vice versa. £50-£200/yr. (c) Employer Liability: legally required if you employ anyone (even part-time). (d) Cyber Insurance: handle client data digitally - increasingly important. (e) Equipment / Tool Insurance: cover your work equipment vs theft / damage. Total typical small-business insurance: £300-£800/yr.
What can I claim as expenses?
Self-employed expense rules under Section 34 ITTOIA 2005: "wholly + exclusively" for business. Common claims: (a) Home office - flat rate (£10-£26/mo) or apportioned actual costs, (b) Mileage at 55p/25p HMRC rates OR actual + apportioned vehicle costs (simplified mileage scheme: Sections 94C-94G ITTOIA 2005), (c) Professional subscriptions, (d) Trade tools + small equipment under £150 (immediate expense; over £150 = capital allowance), (e) Phone + internet (apportioned business %), (f) Marketing + advertising, (g) Software subscriptions, (h) Insurance premiums, (i) Professional development + books, (j) Bad debts written off. Trading allowance: £1,000/yr can be used INSTEAD of expenses for simplicity if gross income < £1k.
When do I need to register for VAT?
£90,000 (2026/27) turnover in any rolling 12-month window. Register within 30 days of breaching threshold (Form VAT1). Effective from start of following month. Alternative: voluntary registration below threshold - useful if (a) your customers are VAT-registered (they reclaim VAT you charge), (b) you have significant input VAT to reclaim. Major decision: Standard VAT scheme vs Flat Rate Scheme (simplified compliance with sector-specific %). VAT registration requires quarterly VAT returns + Making Tax Digital compliance. Often the trigger for moving to limited company structure.
When are tax payments due?
Self Assessment payment schedule: 31 January - balancing payment for previous tax year + first payment on account for current year. 31 July - second payment on account. Payment on Account: 50% of prior year's tax liability paid in advance each January + July. So if your 2025/26 tax was £8,000: January 2027 you pay £4,000 (1st POA) + balancing £8k = £12k total. July 2027 you pay £4,000 (2nd POA). Effectively 18-month overlap of payments. Big cash flow challenge for new self-employed - first year you pay 1 year's tax in January; second year you pay 1.5 years' tax (full prior year + half POA). Save accordingly.
What about MTD ITSA from April 2026?
Making Tax Digital for Income Tax Self Assessment - quarterly reporting requirement. Phased rollout: April 2026 for self-employed + landlords with income £50k+; April 2027 for £30k-£50k; April 2028 for £20k-£30k. Requirements: digital records via approved software (FreeAgent, Xero, QuickBooks, Crunch), quarterly updates (Q1 5 Apr-5 Jul submitted by 5 Aug; Q2 5 Jul-5 Oct by 5 Nov; etc), Final Declaration replacing Self Assessment by 31 January. Penalty regime: 4 points threshold + £200 penalty + 24-month points expiry. Setup BEFORE the April 2026 deadline if your income exceeds £50k threshold.