Running a trade
How to set up a trade business in the UK
Setting up properly takes a weekend of admin and saves you years of problems. This is the order to do things in — from registering with HMRC to getting your first invoice out.
What you'll need
- •Your National Insurance number
- •A business name (check it's not taken on Companies House)
- •A separate email address for the business
Step by step
1Choose sole trader or limited company
Most trades start as sole traders — simpler tax, less admin. A limited company makes sense as turnover grows or you take on bigger contracts. You can start as a sole trader and incorporate later.
2Register with HMRC
Register as self-employed with HMRC for Self Assessment. Do it as soon as you start trading — you have until 5 October after your first tax year, but earlier is easier. Keep records of every payment and expense from day one.
3Understand CIS if you work for contractors
If you do subcontract work, contractors deduct Construction Industry Scheme tax from your pay (usually 20% if you're registered, 30% if not). Register with HMRC as a CIS subcontractor before your first subcontracted job.
4Open a business bank account
Keep business money separate from personal money — it makes tax returns straightforward and looks professional to customers. Most app-based banks open a sole trader account in minutes.
5Get insured
Public liability is the minimum; add tool insurance (tools stolen from vans are the most common trade claim) and consider professional indemnity if you advise or design. Keep certificates handy — customers ask.
6Set up quoting and invoicing
A written quote for every job, an invoice with payment terms, and a way to take card payments. Agree the price in writing before you start — it prevents almost every payment dispute.
7Watch the VAT threshold
You must register for VAT once rolling 12-month turnover passes the threshold (check the current figure on GOV.UK). Many trades stay below it deliberately in the early years — just track your turnover monthly so you're never caught out.
Common mistakes
- •Mixing business and personal money — it turns your tax return into archaeology.
- •Not registering for CIS before subcontracting and losing 30% instead of 20%.
- •Waiting a year to sort insurance — one claim without it can end the business.
When to get a second opinion
Want a sanity check on your setup or pricing? Talk it through with an experienced tradesperson who's been through it.
Ask an experienced tradesperson