What happens if I register as self-employed late?

If you’ve already started working for yourself but haven’t told HMRC yet, you’re not alone – far from it.

It’s a common situation, especially if you started your business as a side project or you weren’t sure whether it would succeed.

However, even a slight delay in registration can cause problems later on.

In this guide, we explain what the official rules are, what actions HMRC takes if you register late, the potential penalties, and what to do if you’ve missed the deadline.

We’ll also show you how to get back on track and what counts as ‘starting a business’ in HMRC’s eyes.

When do you need to register as self-employed?

If you’re earning money on your own (outside employment) – whether that’s selling online, freelancing, consulting, or offering a service – you’re likely to be classed as a sole trader.

You don’t have to notify HMRC the day you make your first sale, but it’s essential to be aware of the official deadlines.

You must register as self-employed by 5th October in your business’s second tax year.

Let’s say you began trading in August 2025. That falls in the 2025/26 tax year (which runs from 6 April 2025 to 5 April 2026). In that case, the deadline to register is 5th October 2026.

This gives you time to get everything set up before submitting your first Self Assessment tax return, which is due by 31 January 2027. You can read details here: How to register as self-employed.

And also try our recent guide to the October 5th self assessment deadline.

What counts as ‘trading’ in HMRC’s eyes?

One reason people register late is that they’re unsure whether they’ve technically “started trading”. For example, what if you’ve only made one or two sales? Or are you still buying supplies and testing if your business idea is viable?

HMRC uses the “badges of trade” to determine whether someone is engaged in trading. These include:

• Are you selling goods or services for profit?
• Do you have a pattern of repeated sales?
• Are you promoting or marketing what you do?
• Did you buy items to resell them?

If the answer to most of these questions is yes, then HMRC will usually treat you as a sole trader – and expect you to register.

You can also read our guide on when your business officially starts trading.

What happens if you miss the 5 October deadline?

The main risk you take is incurring a penalty. However this isn’t always automatic.

If you register late but still file your Self Assessment return on time (by 31 January) and pay your tax in full, HMRC might not charge you anything, especially if you act quickly and it’s a genuine mistake.

That said, if HMRC believe you deliberately delayed registering to avoid paying tax, they can take a stricter approach.

HMRC penalties for late registration

There isn’t a set fine for registering late, but HMRC can issue penalties based on how much tax you should have paid, and whether they think the delay was careless or deliberate.

According to HMRC’s official penalty rules:

Behaviour	Penalty (as % of unpaid tax)
Careless	0% to 30%
Deliberate but not concealed	20% to 70%
Deliberate and concealed	30% to 100%

So if you didn’t owe much tax – or you don’t owe anything at all – there may be no penalty. But if you had undeclared income and didn’t register, you’re more likely to be penalised.

What if I’ve already earned money?

If you’ve already done work, invoiced clients, or sold goods and haven’t yet registered, HMRC still expects you to pay tax on those earnings. This applies even if:

• You didn’t make a profit
• You didn’t earn enough to pay tax
• You weren’t sure if you were ‘really’ self-employed

What matters is whether you were trading, not whether you hit the tax threshold. If your gross income was under £1,000, you might not need to register at all. See our guide to the £1,000 trading allowance.

How will HMRC know I’ve been trading?

You might think you’ve slipped under the radar, especially if your earnings were small. But HMRC now receives data from a wide range of sources, including:

• Online platforms like Airbnb, eBay and Etsy
• Payment processors (e.g. PayPal, Stripe)
• Card terminals and digital bank accounts

They use this data to identify undeclared income and can trace it back several years.

If they find evidence you’ve been trading without registering, they’ll usually write to you and give you a chance to come clean.

This is part of a broader crackdown covered in our news piece: HMRC targets undeclared side hustle income.

How to fix things if you’re late

If you’ve realised you should’ve registered earlier, the best thing to do is act quickly. Here’s what to do:

1. Register for Self Assessment via GOV.UK as soon as possible.
2. Gather your records, including sales, expenses, dates, and any relevant receipts. See our bookkeeping tips and how long to keep tax records.
3. Check if you earned more than the £1,000 trading allowance. If so, you must file a tax return.
4. Submit your Self Assessment return before 31 January. Include all earnings since you started.
5. If you receive a penalty notice, you can usually appeal if you acted promptly and in good faith.

Can I backdate expenses if I register after the deadline?

Yes – you can usually claim for pre-trading expenses from up to seven years before you officially registered, provided they relate directly to your business.

For example, if you bought tools or a laptop in early 2025 but didn’t register until September 2026, you can still include those costs in your first return.

For more on this, see: Can I backdate business expenses before I registered as self-employed? And sole trader expenses you can claim.