The First-Year Self-Employed Checklist for Trades
Your trade is the part you've already learned. Year one goes wrong on the paperwork: registering late, pricing too low, losing receipts and getting caught out by the first tax bill. This is the checklist to work through, in order.
Whether you've just finished your apprenticeship, left an employer, or your weekend jobs have turned into a full diary, the first year on your own has the same handful of jobs to get right. None of them are hard. They're just easy to put off until they become a problem.
This guide works through them in the order you'll meet them. It's general information for sole traders in the UK, not tax advice. Thresholds and dates change, so check anything you act on against GOV.UK or with an accountant.
Key takeaways
- Register for Self Assessment as soon as you start. The deadline is 5 October after the end of the tax year you started trading in.
- Open a separate bank account and get public liability insurance before the first paid job.
- Work out your day rate from your costs and the hours you can actually bill, not from what the firm down the road charges.
- Your first tax bill can include a 50% payment towards next year on top of this year's tax, so put money aside from every job.
- Invoice the day you finish, keep every receipt against the job, and block out a regular slot for admin.
1. Before your first paid job
Choose how you'll trade. Most trades start as sole traders: you register with HMRC, keep records, and pay Income Tax and National Insurance on your profit through Self Assessment. A limited company is a separate legal entity, which limits your personal liability but adds Companies House filings, annual accounts and Corporation Tax. Lots of people start as sole traders and incorporate later, once an accountant says it's worth it.
Register for Self Assessment. You need to do it by 5 October after the end of the tax year (which runs to 5 April) in which you started, but there's no reason to wait. If you'll be working as a subcontractor for contractors in construction, register for the Construction Industry Scheme (CIS) too. Unregistered subcontractors have deductions taken at a higher rate.
Open a separate bank account. It isn't a legal requirement for a sole trader, but it makes your records, your tax return and any conversation with an accountant much easier.
Get insured. Public liability is the baseline most customers and every commercial client will expect. If you employ anyone, employers' liability is a legal requirement. Make sure your van insurance covers business use, and look at tool cover, because a stolen kit bag can stop you earning for a week.
Get your registrations in your own name. Gas Safe, a competent person scheme for electrical work, FENSA, OFTEC, MCS — whatever applies to your trade needs to be yours, not your old employer's.
Doing side jobs while employed?
At the time of writing, if your gross income from self-employment is more than £1,000 in a tax year (the trading allowance), you need to register for Self Assessment and report it, even if you also have a PAYE job. Check your employment contract for clauses about outside work as well.
2. Set up your paperwork in week one
Get your business details, logo and usual rates set up once, so every quote and invoice goes out looking the same. Customers judge a new business on how it presents. A branded PDF quote beats a price in a text message, even if the number is the same.
Decide your payment terms before you need them: when the invoice is due, whether you take a deposit on bigger jobs, and how customers can pay. Bank transfer works, but a pay-by-card link on the invoice gets you paid faster because the customer can do it there and then.
Give people an easy way to book you. A Google Business Profile and a booking link you can put in your texts, socials and on the van will catch the work you'd otherwise miss while you're on the tools.
3. Price so you actually make money
The most common year-one mistake is charging your old hourly rate. As an employee, your employer paid for the van, the fuel, the tools, the insurance, the holidays and the days with no work. Now you do. Work out your day rate from what you need to earn, your real costs and the number of days you can actually bill, which is never five a week for 52 weeks.
Price materials properly. Decide on a markup to cover collecting, storing and guaranteeing them, and quote from the net price if you're VAT-registered. Put everything in an itemised written quote so the customer knows what's included and you have a record of what was agreed.
Review your prices at six months. If you're booked solid weeks ahead, you're probably too cheap.
Doing this on a job? Target day rate calculator — part of TradePlanr. Free to start, no card needed.
4. Keep records as you go
Keep every receipt, against the job it was for, at the time you buy. Fuel, materials, tools, phone, insurance and workwear can all be allowable expenses, and every one you lose costs you tax. Faded till receipts in the footwell are where most of that money goes.
Record what each job actually cost as well as what you charged. Turnover isn't profit, and knowing which jobs and customers make you money is how you price better in year two.
Keep a mileage log if you use your vehicle for work, and talk to an accountant about whether to claim actual costs or HMRC's simplified mileage rates.
Keep your records for at least five years after the 31 January filing deadline for the tax year they relate to.
5. The tax dates that matter in year one
The tax year runs from 6 April to 5 April. You report each year's profit on a Self Assessment return, filed and paid by the following 31 January.
The first bill is the one that catches people out. If your tax bill is over £1,000 (and less than 80% of it was already taken through PAYE), HMRC also asks for payments on account: two advance payments towards next year, each half of this year's bill, due on 31 January and 31 July. So your first January payment can be this year's tax plus half as much again.
| Date | What happens |
|---|---|
| 5 April | End of the tax year |
| 5 October | Deadline to register for Self Assessment if you started trading in the tax year that just ended |
| 31 October | Paper tax return deadline |
| 31 January | Online tax return deadline, pay the balance for the year just gone, and the first payment on account for the current year |
| 31 July | Second payment on account |
Put tax aside from every job
Move a fixed share of every payment into a separate savings account as it comes in, so the January bill isn't a shock. A tax and NI estimate from your expected profit will tell you roughly how much. Your accountant can give you a better figure once you're trading.
6. VAT, CIS and Making Tax Digital
VAT: you must register once your taxable turnover in any rolling 12 months goes over the threshold, which was £90,000 at the time of writing. It's turnover, not profit, so materials you supply and fit count towards it. Keep an eye on your rolling total from the start.
CIS: if you subcontract for contractors in construction, they'll deduct tax from your payments and pass it to HMRC. Keep the deduction statements, because those deductions count against your tax bill at the end of the year.
Making Tax Digital for Income Tax is being phased in for sole traders based on income, starting with the highest earners from April 2026 and extending to lower thresholds in later years. It means keeping digital records and sending quarterly updates through compatible software. Check GOV.UK for whether and when it applies to you. If your records are already digital, it'll be much less of a change.
7. Habits that keep the paperwork small
Invoice the day the job's done, before you leave the drive if you can. Every day you wait, you're less likely to get paid on time.
Block out one regular slot a week for admin: chase anything overdue, file any receipts you missed, and check next week's diary. Twenty minutes a week beats a lost weekend every quarter.
Chase late payments on set days with polite, firm messages, and stop working for customers who won't pay.
Once a month, check who owes you, what you earned and how much is set aside for tax. If that takes more than ten minutes, your system needs fixing.
One place for all of it
The reason paperwork piles up is that it's spread across a notepad, your texts, a spreadsheet and the footwell. Put the diary, quotes, invoices and receipts in one app on your phone and most of the habits above take care of themselves.
From guidance to action
Frequently asked questions
Do I need an accountant in my first year?
Not legally. Plenty of sole traders file their own Self Assessment. A good accountant often pays for themselves through expenses you didn't know you could claim, and they're worth talking to before big decisions like going limited or registering for VAT. Keep your records digital and tidy either way, because it makes their job cheaper.
How much should I put aside for tax?
It depends on your profit, but you'll pay Income Tax and Class 4 National Insurance on profit above your allowances, and possibly a payment on account on top. Use a self-employed tax and NI estimate on your expected profit, then put that percentage of every payment into a separate account as it lands.
What expenses can I claim?
Generally, costs you have wholly and exclusively for the business: materials, tools, workwear, fuel and vehicle costs (or mileage), insurance, phone, software, trade registrations and training to keep your existing skills current. The rules have detail and exceptions, so check GOV.UK or ask an accountant. Whatever you claim, you need the receipt.
Do I need to register for VAT straight away?
Only if you expect your taxable turnover to go over the registration threshold (£90,000 at the time of writing) in a rolling 12 months, or in the next 30 days alone. You can register voluntarily below it, which can suit you if most of your customers are VAT-registered businesses. Talk it through with an accountant first.
When will I get my first tax bill?
Later than you think, which is why it catches people out. If you start in June 2026, that tax year ends on 5 April 2027 and the bill is due on 31 January 2028, possibly with a payment on account for the following year on top. Saving from the first job means it's sitting there waiting.
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