The £1k Profit Rule for UK Entrepreneurs
Feb 06, 2025
Are you thinking about starting a business or a side hustle?
BUT you’re holding yourself back because of having to register with HMRC?
Well, good news—you don’t need to register as a sole trader (self-employed person) in the UK until you make £1,000 profit in a tax year.
This means you have breathing room to test your idea, see if it’s viable, and start making money before you need to start dancing with the tax man.
Let’s dive in further…
❝There once was an aspiring founder so cool,
Who learned of the £1k profit rule.
“No need to declare,
Till profits are there!”
Now testing their biz is the tool!❞
The £1k Profit Rule for UK Entrepreneurs
One of the biggest barriers to starting a business is uncertainty. Many people get stuck before they even begin because they’re worried about tax, compliance, and whether their idea will even work.
The £1,000 profit threshold gives you the freedom to:
✔ Test your product or service without rushing into paperwork.
✔ See if there's demand before committing fully.
✔ Make some money before worrying about tax obligations.
Instead of spending weeks stressing over registrations and compliance, you can focus on selling, learning, and refining your business idea first.
What This Means for You
- Profit, not revenue: This rule applies to profit (income minus expenses), not just total sales.
- UK-only: This applies if you’re based in the UK—rules in other countries will be different.
- Beyond £1,000? Register with HMRC: Once your profit crosses this threshold, you’ll need to register as a sole trader and report your earnings.
This small window of opportunity gives you time to experiment without immediately jumping into tax filings.
How to Use This to Your Advantage
1. Start Small & Test the Market Sell a few products or services to see if people are willing to pay for them. Focus on validating demand before going all in.
2. Track Your Earnings & Expenses Even though you’re not registered yet, keep basic records so you know when you’re approaching the £1,000 profit mark. A spreadsheet will work.
3. Make a Plan for When You Hit the Threshold Once you start making consistent profit, be ready to register as a sole trader and comply with HMRC requirements - you could face penalties if you don’t.
No More Excuses—Just Start!
So if you’ve been hesitating because of tax worries, now you know: you can start today.
No need to register yet—just get started and see what happens!
👋 How I can help you
My new Thriving Start-Up online course is now available and it’s perfect for:
- Professionals looking to leave corporate life and start a purpose-driven business.
- Stay-at-home parents wanting to turn a passion into profit.
- Anyone with a business idea they’re ready to bring to life.
It includes:
✔ 30 Business Modules
✔ Resource Guide to use as your Action Plan
✔ Practical Strategies to get you started
Behind The Thriving Start-up
If you're dreaming of starting your own business while balancing a full-time job, know that you're not alone—and it is achievable. I'm passionate about helping other entrepreneurs bring their visions to life (and yes, I know everyone says that, but I truly mean it!). With focus, discipline, and a strong belief in your abilities, you, too, can turn your business vision into reality - and that’s the mission behind The Thriving Start-up.
