Sole Trader registration threshold to go up from £1,000 to £3,000 per year

Last Updated on 14 March 2025

This post has been updated to clarify the difference between the sole trader registration threshold and the trading allowance.

Well, it’s nice to write about some good-ish news.

The government has announced that the point at which a sole trader has to register as such for self-assessment (ie filling in a tax form every year) will go up from £1,000 to £3,000 per year “in this parliament”.

That should mean that you’ll soon be able to earn £3,000 ‘on the side’ from sole trader work, without having to register as a sole trader for self assessment.

The change could benefit PAYE freelancers who just do a bit of sole trader work.

Q: The current ‘trading allowance’ for sole traders is also £1,000. Is that changing too?

In a sane world you would also be able to use the £3,000 as a round figure in the expenses box in your sole trader tax form. At the moment (2025) this ‘trading allowance’ figure is £1,000.

But…the world isn’t particularly sane, so it looks like the trading allowance might stay at £1,000, while the registration threshold goes up to £3,000.

On the face of it this doesn’t make sense, as someone earning between £1,000 and £3,000 in a year would not have to register for self-assessment under the new plans, but would have to declare turnover and business costs somehow in order to pay the right amount of tax.

What?

I know, right?

So it looks like there might be some sort of online portal thingy for reporting the sole trader figures if you go above £1,000 of invoices in a tax year.

Then you’d have to register for self-assessment once you hit sole trader income of £3,000 in a tax year.

But we seem to be looking at two different thresholds here.

How this online portal thingy actually differs from full-fat self-assessment is TBC.

When?

I’ll let you know when they announce more. At the moment there are no details apart from “in this parliament”.

Perhaps they need time to work out that some of this will be more confusing for sole traders than the current system.

“In this parliament” could mean 2029, but my gut tells me they will bring it in sooner.

Let’s see.

I tip my hat to IPSE who drew my attention to the distinction between the thresholds in this post >

Posted on 12 March 2025