First 90 Days Self-Employed in the UK

Your week-by-week tax checklist from day one

Your first 90 days as self-employed in the UK are a simple weekly checklist, not a scary tax maze. Register with HMRC via the online CWF1 form in week one, open a separate business bank account, and start logging income and expenses from day one. Set aside 25–30% of every payment into a tax reserve pot. By month three you should understand payments on account, have decided whether you need an accountant, and know the key deadlines: 31 January for your online return and payment, 31 July for your second payment on account.

Last reviewed: 26 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

Week 1 — Register and set up the rails

Week one is administrative scaffolding. Get the registration and banking sorted now and the rest of the 90 days becomes a routine, not a panic.

☐Register for Self Assessment via gov.uk (CWF1 form) — get a UTR within ~10 working days
☐Open a dedicated business bank account (Starling, Tide, Mettle and Monzo Business all have free tiers for sole traders)
☐Decide on bookkeeping approach: spreadsheet (FreeAgent template is free), simple app (Coconut, ANNA), or full software (Xero, FreeAgent, QuickBooks) — software not required at this scale but worth budgeting £10–£25/month
☐Set up a separate savings account (or pot) labelled 'Tax reserve' — move 25–30% of every invoice received into it the same day
☐Read the gov.uk guidance on what counts as self-employed vs employed (HMRC ESI test) and on the £1,000 Trading Allowance

Weeks 2–4 — Bookkeeping discipline and the expense base

Build the habit of logging every transaction within 48 hours. The cost of catching up six months of missing receipts later is hours of unpaid time and uncertain HMRC defensibility. The cost of doing it weekly is twenty minutes.

What to log for every income transaction

Date received, payer, gross amount, what for, invoice number (if you raised one), bank account it landed in. Keep electronic copies of every invoice issued and every contract signed for at least six years.

What to log for every expense

Date paid, payee, gross amount, what for, the business purpose (so you can defend it under enquiry), and the receipt. The receipt is the evidence; without it the deduction is at HMRC's discretion. Cloud receipts via Receipt Bank / Hubdoc / phone snap into Google Drive all work — the medium doesn't matter, the existence of the receipt does.

The expense categories most under-claimed by first-year self-employed

Mileage at HMRC's AMAP rates (45p/25p for cars), use-of-home (simplified £10/£18/£26 per month depending on hours), phone and broadband apportioned, professional subscriptions to recognised bodies (HMRC list 245), pre-trading expenditure incurred in the 7 years before you started (ITTOIA 2005 s.57), and capital allowances on the laptop / tools you already owned (Annual Investment Allowance at market value when introduced to the business).

☐Set a weekly 20-minute bookkeeping slot (Sunday evening works for most)
☐Photo every paper receipt; download every digital receipt to one folder
☐Decide the mileage method: AMAP (per-mile) or actual costs — you cannot mix between methods within a tax year
☐If you've spent on equipment in the 7 years before starting, list it now — pre-trading expenditure is claimable at start of trade

Month 2 — Decisions: accountant, VAT, structure

By month two you have enough live data to make three structural decisions that shape the rest of the year.

Decision 1: Do you need an accountant?

For straightforward sole trader work under £30k turnover with simple expense categories, a £150–£300 / year accountant is often overkill but typically pays for itself by catching missed reliefs (use-of-home, mileage, pre-trading expenditure, simplified vs actual elections). Above £30k or with any of: VAT registration, multiple income streams, property income, complex mileage, or capital items, the accountant cost falls under the saved tax + reduced enquiry risk. Below £15k turnover, self-serve via the gov.uk guidance plus a calculator is usually sufficient.

Decision 2: Will you cross the £90,000 VAT threshold?

The VAT registration threshold is £90,000 of taxable turnover on a rolling 12-month basis (raised from £85,000 in April 2024). You must register within 30 days of the end of the month in which you crossed the threshold. Plan for this from month two if your trajectory looks anywhere near £75,000 — the Flat Rate Scheme, cash accounting, and voluntary deregistration via the £88,000 lower threshold all need forward planning.

Decision 3: Stay sole trader or incorporate to Ltd?

Below £30,000 profit, sole trader is usually cheaper and simpler (lower NIC, no separate corporation tax return, no Companies House filings). Above £50,000 profit, the Ltd structure starts to become attractive via the salary + dividend split, but only if you can leave profits in the company to defer personal extraction. The crossover varies year to year as dividend tax rates and corporation tax move; for 2025/26 the rough rule of thumb is that incorporation pays from around £40k–£50k of sustained annual profit, but only after factoring in the £200–£800 / year accounting overhead and the loss of the £20,000 ISA-style flexibility of post-tax sole trader cash.

Month 3 — Lock in the rhythm

Month three is about confirming the routines that will carry you through to your first 31 January.

☐Confirm tax-reserve account has been receiving 25–30% of every invoice; reconcile against bookkeeping
☐Diary 31 January and 31 July for the next three tax years (most missed-payment penalties are pure diary failures)
☐Decide whether to file your first Self Assessment online by 30 December (allows coding out of small tax bills via PAYE the following year) or by 31 January (lump-sum payment)
☐Set up Direct Debit for VAT (if registered) — the only way to get an automatic three-day grace period on the 1m+7d deadline
☐If using an accountant: book your year-end review in November / December, not January (when slots are gone)

The 10 most expensive first-year mistakes

Below are the most-common first-year mistakes, with approximate £ cost at three profit levels. Numbers assume the 2025/26 rate framework and the standard rUK Income Tax bands. Your exact figures will vary; the orders of magnitude don't.

Approximate cost of common first-year mistakes by profit level

Mistake	£30k profit	£60k profit	£100k profit
No tax reserve from day one (forced borrowing to pay January bill)	£150–£300 interest	£500–£800 interest	£1,200–£2,500 interest
Missing the 5 October notify-by date (Failure to Notify penalty)	£200–£600	£500–£1,500	£1,500–£3,500
Missing 31 January filing deadline (Sch 55 FA 2009)	£100–£900	£100–£1,300	£100–£2,500+
Missing 31 January payment (5% / 5% / 5% surcharge stack)	£300	£900	£2,000
Not claiming the £1,000 Trading Allowance / actual-expense election optimally	£140	£280	£420
Not claiming mileage (avg 3,000 business miles unclaimed at 45p)	£270	£540	£810
Not claiming use-of-home at simplified £18/month	£43	£86	£130
Not claiming pre-trading expenditure (laptop, phone, tools introduced at start)	£100–£300	£200–£600	£300–£900
Mixing personal + business in one bank account (hours of catch-up bookkeeping + enquiry exposure)	£100–£400 accountant time	£200–£600	£400–£1,000
Not realising the 31 January bill includes a payment on account (cash shock at 150% of liability)	Cashflow stress, no direct £ cost	Cashflow stress + possible TTP interest	TTP interest of £400–£1,200

Statute references: ITTOIA 2005 s.34 (general expense rule); ITTOIA 2005 s.57 (pre-trading expenditure); ITTOIA 2005 s.783A (Trading Allowance); TMA 1970 ss.7, 8, 59A; FA 2008 Sch 41 (Failure to Notify); FA 2009 Schedules 55 + 56.

Frequently asked questions

What happens if I miss the Self Assessment deadline?+

The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.

Do I need an accountant or can I file Self Assessment myself?+

Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.

How do payments on account work?+

When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.

Do I need to register straight away or can I wait?+

You must notify HMRC of new self-employment by 5 October following the end of the tax year in which you started. So if you started trading in June 2026 (2026/27 tax year), you must register by 5 October 2027. Earlier registration is fine and is recommended — it gives you a UTR (Unique Taxpayer Reference) in time for class 2 NIC voluntary payment decisions and removes the risk of forgetting. Registration is free, takes about 10 minutes, and is done at gov.uk/register-for-self-assessment via the CWF1 form.

Can I just use my personal bank account?+

Technically yes — sole traders are not legally required to have a separate business bank account (unlike Ltd companies). Practically, no. Mixing personal and business transactions makes bookkeeping unreliable, makes the Trading Allowance / actual-expense election harder to optimise, makes any future HMRC enquiry significantly more painful, and on most personal-account T&Cs is itself a breach of contract. A free business account or even a dedicated second personal account (clearly labelled) takes 30 minutes to open and saves hours every quarter thereafter.

What is the £1,000 trading allowance and should I claim it?+

The Trading Allowance (ITTOIA 2005 s.783A) gives you £1,000 of gross self-employment income tax-free per tax year. If your gross income is under £1,000 you don't even need to register or file. If your gross income is over £1,000 you can either (a) deduct actual allowable expenses or (b) deduct the £1,000 allowance — whichever gives the bigger deduction. The allowance election is per-tax-year and per-trade. If your expenses regularly exceed £1,000, you'll typically be better off claiming actuals; if you have minimal expenses (digital services, consultancy without overhead) the allowance often wins.

When will I actually have to pay tax?+

Your first tax bill arrives later than most people expect. If you start trading in (say) July 2026, your 2026/27 tax year ends 5 April 2027, your online return is due by 31 January 2028, and the balancing payment for that first year is also due 31 January 2028. If your tax bill is £1,000 or more you'll ALSO owe a first payment on account on 31 January 2028 (50% of the bill) and a second payment on account on 31 July 2028 — so the cash hit on that first 31 January is 150% of the actual liability. That's the moment most first-year self-employed people get caught out, and it's the single biggest reason to bank 25–30% from week one.