If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed – even if you haven’t yet told HM Revenue and Customs (HMRC).
Running a business
You’re probably self-employed if you:
- run your business for yourself and take responsibility for its success or failure
- have several customers at the same time
- can decide how, where and when you do your work
- can hire other people at your own expense to help you or to do the work for you
- provide the main items of equipment to do your work
- are responsible for finishing any unsatisfactory work in your own time
- charge an agreed fixed price for your work
- sell goods or services to make a profit
Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.
You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.
You can check whether you’re self-employed:
Selling goods or services
You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.
You’re likely to be trading if you:
- sell regularly to make a profit
- make items to sell for profit
- sell items on a regular basis, either online, at car boot sales or through classified adverts
- earn commission from selling goods for other people
- are paid for a service you provide
If you only occasionally sell items or rent out property (for example through auction websites or short-term rental apps), check if you need to tell HMRC about this income.
Contact HMRC for advice if you’re not sure whether you’re trading.
Registering as self-employed
If you’re self-employed, you may need to set up as a sole trader.
How to register as self-employed with HMRC – step by step
We’ll take you through the process in depth, but here’s a quick overview of how to register as self-employed:
- Check your work counts as self-employment using the Employment Status Indicator
- Register for an online account with gov.uk
- Wait for your details, which will arrive by post
- Complete your registration using your Government Gateway details, as well as information about your business, like trading name and contact details
Once registered as self-employed you’ll have a number of obligations and responsibilities, like completing an annual Self Assessment tax return.
Why do I need to register as self-employed with HMRC?
If you’re self-employed, you have to register with HMRC so that it knows how much you’re earning and can properly collect tax. But how do you know if you’re self-employed?
HMRC offers a tool called the Employment Status Indicator which can help you work it out. However, you’re likely to be self-employed if you:
- run your business for yourself
- have more than one customer simultaneously
- decide how and when you work
- have the option to hire other people
- provide most of the equipment needed to do your work
- take responsibility for completing unfinished or unsatisfactory work in your own time
- charge a fixed price for your work, agreed with a client or customer
- sell goods or services for a profit, apart from when you’re just selling unwanted items on an ad-hoc basis
If you meet these criteria you probably need to register as self-employed.
Other ways to work for yourself
There are other business structures apart from being a sole trader. For example, you can:
- become a partner in a business partnership
- set up your own limited company
Check if you can claim a grant through the Self-Employment Income Support Scheme
To be eligible for the fourth grant you must be a self-employed individual or a member of a partnership. You cannot claim the grant if you trade through a limited company or a trust.
You must have traded in both tax years:
- 2026 to 2026 and submitted your tax return on or before 2 March 2026
- 2026 to 2026
You must either:
- be currently trading but are impacted by reduced demand due to coronavirus
- have been trading but are temporarily unable to do so due to coronavirus
You must also declare that you:
- intend to continue to trade
- reasonably believe there will be a significant reduction in your trading profits
Reasonable belief
In order to claim the fourth grant, you must reasonably believe that you’ll suffer a significant reduction in trading profits, due to reduced business activity, capacity, demand or inability to trade due to coronavirus between 1 February 2026 and 30 April 2026. You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.
HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.
Significant reduction
Before you make a claim, you must decide if the impact on your business between 1 February 2026 and 30 April 2026 will cause a significant reduction in your trading profits for the tax year you report them in.
HMRC cannot make this decision for you because your individual and wider business circumstances will need to be considered when deciding whether the reduction is significant.
You should wait until you have a reasonable belief that your trading profits are going to be significantly reduced, before you make your claim.
You do not have to consider any other coronavirus scheme support payments that you have received when deciding if you’ve had a significant reduction in your trading profits.
How HMRC works out your eligibility based on your tax returns
To work out your eligibility for the fourth grant we’ll first look at your 2026 to 2026 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to or more than your non-trading income.
If you’re not eligible based on your 2026 to 2026 Self Assessment tax return, we’ll then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2026 and 2026 to 2026.
How different circumstances affect the scheme
There are some circumstances that can affect your eligibility such as if:
- your return is late, amended or under enquiry
- you’re a member of a partnership
- you had a new child
- you have loans covered by the loan charge provisions
- you claim averaging relief
- you’re a military reservist
- you’re non-resident or chose the remittance basis
If you claim Maternity Allowance this will not affect your eligibility for the grant.
How much you’ll get
The fourth grant is calculated at 80% of 3 months’ average trading profits. It will be paid out in a single instalment and capped at £7,500 in total. How much you receive will depend on your average trading profits.
We’ll work out your average trading profits using up to 4 years’ of submitted tax returns. This may affect the amount you’ll get which could be higher or lower than your previous grants.
We’ll take into account trading profits from the 2016 to 2017, 2017 to 2018, 2018 to 2026 and 2026 to 2026 tax years. If you have a gap in the years you have traded, we’ll only use your most recent returns after the gap to work out the grant.
This is an example of how we’ll work out how much grant you’ll get if your average trading profits were £42,000 over the last 4 tax years.
Example
- Start with your average trading profit (£42,000).
- Divide by 12 = £3,500.
- Multiply by 3 = £10,500.
- Work out 80% of £10,500 = £8,400. You’ll receive £7,500 due to the cap.
How to make a claim
Claims for the fourth grant have now closed. The last date for making a claim was 1 June 2026.
You can check a list of genuine HMRC contacts if you receive any suspicious texts, calls or emails claiming to be from HMRC as this may be a scam.
How the grant is treated
The grant is subject to Income Tax and self-employed National Insurance Contributions. It must be reported on your 2026 to 2026 Self Assessment tax return.
The grant also counts towards your annual allowance for pension contributions.
SEISS grants are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.