Freelancing in the UK: sole-trader registration, the £90,000 VAT threshold, and Making Tax Digital from April 2026
A UK freelancer registers as a sole trader with HMRC for Self Assessment, then pays income tax and Class 4 National Insurance on profits. VAT registration only bites above £90,000 turnover — the highest threshold in the OECD. From 6 April 2026, sole traders with income over £50,000 must keep digital records and file quarterly under Making Tax Digital.
This article is general information, not tax advice. Regulations change — verify the current rules with the official sources below before acting.
Going freelance in the UK is light on upfront bureaucracy — no chamber of commerce to join, no trade licence to buy. You register as a sole trader with HMRC, and the tax obligations follow from there.
Registering as a sole trader
You register for Self Assessment with HMRC. Do it by 5 October following the end of the tax year (the UK tax year runs 6 April to 5 April) in which you started trading. HMRC issues a 10-digit Unique Taxpayer Reference (UTR) and a Notice to File, and from then on you submit one Self Assessment return a year (online filing deadline 31 January). There is no separate company to set up — as a sole trader, you and the business are the same legal person, and you keep the profits after tax.
The £90,000 VAT threshold
You must register for VAT once your taxable turnover passes £90,000 over any rolling 12 months — or you expect to within the next 30 days. That is the highest registration threshold in the OECD, alongside Switzerland, and it has held since 1 April 2024. Below it, registration is voluntary (worth it only if you want to reclaim input VAT or sell to VAT-registered clients). The deregistration threshold is £88,000. Once registered you charge VAT, file VAT returns (usually quarterly), and already keep digital records for VAT under Making Tax Digital.
Income tax and National Insurance
Freelance profit is taxed through Self Assessment on the personal income tax scale: a £12,570 personal allowance, then 20% up to £50,270, 40% up to £125,140, and 45% above — thresholds currently frozen. On top of income tax, the self-employed pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above. Class 2 National Insurance is no longer required to be paid (since April 2024); you can still pay it voluntarily (£3.65/week in 2026/27) to protect your State Pension record if your profits are below the small-profits threshold (£7,105 from April 2026).
Making Tax Digital is the big change
From 6 April 2026, sole traders and landlords whose combined self-employment and property income tops £50,000 must keep digital records in MTD-compatible software and send HMRC quarterly updates plus a year-end final declaration — replacing the single annual return workflow. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. HMRC is waiving late-update penalty points for the first 12 months. In practice it rewards keeping your books current all year instead of reconstructing them each January.
General information about freelancing in the UK, current as of the review date above, and not tax advice. Thresholds and rates change — confirm current figures with HMRC (gov.uk) or a qualified accountant.
Frequently asked questions
What is the VAT registration threshold in the UK?
£90,000 of taxable turnover over any rolling 12-month period — the highest registration threshold in the OECD, alongside Switzerland, and unchanged since 1 April 2024. Below it you can register voluntarily or not at all; once you cross it (or expect to within the next 30 days) registration is mandatory. The deregistration threshold is £88,000.
Do I have to use Making Tax Digital for Income Tax?
From 6 April 2026, yes if your combined self-employment and property income is over £50,000: you must keep digital records in compatible software and send HMRC quarterly updates plus a year-end final declaration, instead of one annual return. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. HMRC is not issuing late-update penalty points for the first 12 months.