Sole traders and freelancers

Specialist accounting services for Sole traders and freelancers

Sole traders and freelancers are vital to the UK's small business economy. While there are many benefits to working for yourself, those who choose to do so also need help with sound financial planning and submitting their taxes on time. Abbott & Brown helps self-employed individuals stay on top of their finances and comply with HMRC rules by providing a range of accounting and tax filing services.

What is the difference between a freelancer and a sole trader?

In the UK, while the terms “sole trader” and “freelancer” are often used interchangeably, they carry distinct meanings, particularly in legal and tax contexts.

Sole trader

A sole trader is the simplest and most common legal business structure in the UK. They are personally responsible for all business debts and liabilities, and business profits are taxed as part of their personal income under the Income Tax Act. Sole traders must register for Self Assessment with HM Revenue and Customs, submit annual tax returns, and may also need to register for VAT if their turnover exceeds the applicable threshold.

Freelancer

On the other hand, a freelancer is not a legal business structure but a term used to describe a way of working. Freelancers are typically self-employed individuals who provide services to multiple clients on a project or contract basis. While many operate as sole traders, they can also choose other structures, such as limited companies or umbrella arrangements. The structure they select determines their tax treatment, responsibilities, and personal liability, meaning freelancers may be subject to different rules depending on how their business is set up.

Registering as a sole trader with HMRC

As a sole trader, you must register with HM Revenue and Customs as soon as you start trading. You will then receive a Unique Taxpayer Reference (UTR) number, which is needed to file your Self Assessment tax returns. You must notify HMRC of your self-employment by 5 October following the end of the tax year in which you started trading. For example, if you started trading in the 2024/25 tax year, you must register by 5 October 2025 to avoid penalties.

Signing up online and acquiring a Unique Taxpayer Reference (UTR) number

Keeping accurate digital records of every transaction, including income, expenses, invoices, bank statements, and more.

Signing up for self-assessment and paying income tax and NIC contributions according to the Class 2 or Class 4 limits

Registering and sending in VAT returns (if you need to)

Following the guidelines for business licenses, industry standards, and insurance

How we help sole traders and freelancers

Registering with HMRC – setting you up online and obtaining your Unique Taxpayer Reference (UTR).

Self Assessment and National Insurance – registering you for Self Assessment and ensuring income tax and Class 2/Class 4 National Insurance contributions are calculated and paid correctly.

VAT registration and submissions – advising when registration is required, handling the registration process, and preparing and filing your VAT returns.

Digital records & Making Tax Digital (MTD ITSA) – from 6 April 2026, sole traders with annual turnover above £50,000 must maintain digital records and submit quarterly updates to HMRC using approved software. Thresholds will reduce to £30,000 from April 2027 and £20,000 from April 2028.

Complete digital accounting – managing your accounts through cloud-based software and integrations for seamless record-keeping.

Filing tax returns – preparing and submitting the relevant tax return based on your chosen business structure.

IR35 advice – guidance on off-payroll working rules for contractors operating through limited companies.

With our support, you can stay compliant with HMRC requirements while you focus on running and growing your business.

Freelancers

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