Step 01

Before you charge anyone: is it worth it?

A skill people will pay for is one of the few ways out of a money hole that doesn't depend on anyone else. Mending clothes, tidying gardens, painting a room, sharpening knives, fixing bikes: none of it needs a qualification, and all of it is work people would rather pay for than do. The rest of this path teaches the skills. This course is the part before the first job, the bit that keeps the extra money from causing trouble with the taxman, the benefits office or a debt plan.

The three questions

Will anyone pay?

Ask before you spend. Who do you know who would pay for this, and how much? Neighbours, family, a local Facebook or WhatsApp group, the noticeboard in the corner shop. Three yeses is enough to start.

What will it cost to start?

List everything you'd need and cross off what you already own, can borrow or can buy second-hand. If the rest costs more than a few weeks of the money you hope to earn, start smaller.

Is the time free?

An hour spent earning £12 is worth it. An hour that costs you a shift, childcare or sleep may not be. Be honest about which hours you have.

Don't borrow to start

No credit card, loan or buy-now-pay-later for tools or stock. Every course in this path can be started with what you have or a few second-hand pieces. Let the first jobs pay for better kit.

What you need

A record of every pound in and out

Free

A notebook or a spreadsheet: date, who paid, how much, and what you spent on materials or travel. Ten seconds a job. It's what tells you whether this is worth doing, and it's what you'll need for tax and benefits.

Visit sheets.google.com LibreOffice (offline)

Your paperwork, in one place

Free

Your Universal Credit or other benefit details, and the agreement for any debt plan you're in. Step 2 tells you who needs to hear about extra income, and you'll want the details to hand.

A pot for tax

Free

Put a share of every payment aside the day it arrives, in a separate account or savings pot, so a tax bill is never a surprise. If you go over the £1,000 allowance, a fifth of your profit is a sensible starting share. MyOwnPurse works the share out for you.

MyOwnPurse

Step 02

Tax, benefits and your debts

Tax: the £1,000 trading allowance

The first £1,000 you earn from self-employment and casual work in a tax year (6 April to 5 April) is covered by the trading allowance. It's measured on what customers pay you, before your costs, and it's one allowance for everything you do, not one per activity. Stay under it and you don't need to tell HMRC. Go over it and you register for Self Assessment by 5 October after the tax year ends, then pay any tax by 31 January. If your costs are high, you can deduct your real costs instead of using the allowance.

Selling your own things

Clearing out the loft and selling your own unwanted belongings isn't trading, and there's no tax on it. Buying things to sell on for a profit, or making things to sell, is trading.

Online platforms report sellers

Online marketplaces, selling apps and holiday-let sites send HMRC details of sellers who make 30 or more sales, or about £1,700 or more, in a calendar year. A report isn't a tax bill. It just means HMRC can see the income, so keep your records.

National Insurance

Class 2 National Insurance for the self-employed was abolished in April 2024. Class 4 is only due on profits over £12,570, far beyond most side incomes.

Universal Credit

If you get Universal Credit, earnings from self-employment have to be reported every month, with your costs, through your online account. Your payment goes down as your earnings go up, so you're usually still better off earning, but you keep less of each pound than you might expect. If self-employment becomes your main work, Universal Credit can apply a minimum income floor after the first year, assuming you earn a set amount whether you do or not. Before you start, check how it will affect you with Turn2us or Citizens Advice: both are free.

Debt plans: tell them first

If you're in a formal debt arrangement, extra income has to be reported, and some of it may need to go to the people you owe. That's not a reason not to earn: more income usually means finishing sooner. It's a reason to tell the right person before you start.

IVA

Tell your insolvency practitioner. An increase in income can change your monthly payment.

Debt Relief Order

Tell the official receiver, in writing, and keep a copy. A rise in income during the order can change it.

Debt management plan

Tell your plan provider. Your payments are based on your budget, so they'll want the new figures.

No formal plan

Put the first earnings towards priority debts (rent or mortgage, council tax, energy, court fines) before anything else. A free debt adviser will help you work out the order.

Step 03

Doing it properly: insurance, licences, prices

Insurance

If you work in other people's homes or gardens, get public liability insurance before your first job. It covers you if you break something or someone gets hurt, it costs a few pounds a month for small sole traders, and some customers will ask. If you keep stock or tools at home, tell your home insurer: business use can void a policy that doesn't know about it. Driving to jobs needs business use on your car insurance too.

Licences and safety

Food

Selling food you make means registering as a food business with your council, free, at least 28 days before you start. The Food Hygiene course in this path covers the rest.

Selling in the street

A pitch on the street or in a public place usually needs a street trading licence from the council. A market or car boot sale is normally covered by the organiser: ask.

Products with safety rules

Candles, cosmetics, toys and anything electrical have their own safety and labelling rules. Check them before you sell, or stick to services and mending, which don't.

Your first price

Work it out the same way every time: materials, plus your time at an hourly rate you'd be happy with, plus travel. Then check it against what others charge locally. For a jeans hem: twenty minutes, thread worth pennies, and alterations shops locally charging £10 to £15. Charging £10 is fair, quick to say yes to, and leaves room to go up once you have a few happy customers. Don't price yourself at nothing to win work: it's hard to raise later, and it's your time.

Get paid properly

Agree the price before you start, take payment when the job's done, and give a simple receipt. Bank transfer leaves a record; cash is fine as long as it goes in your book the same day.

Step 04

From first job to sole trader

Most side incomes stay small, and that's fine: a few hundred pounds a year towards a debt is a few hundred pounds. Some grow. Either way, the steps are the same, and you only take the next one when you need it.

✓

First paid job

Week 1

Three people asked, one said yes, the price agreed up front. Everyone you need to tell has been told. The money is in your book and a share in your tax pot.

A handful of regulars

First few months

Word of mouth doing the work. Prices checked against your records: if a job takes longer than you thought, the price goes up.

Past £1,000 in a tax year

When it happens

Register for Self Assessment by 5 October after the tax year ends. Your records and tax pot mean the return takes an evening, and the bill is already covered.