Most people start a dropshipping shop on their own, as a sole trader. You don't need to fill in any forms to start selling. But once your shop takes more than a certain amount, HMRC needs to know about it, and from your first sale you need to keep records.
This guide explains when you have to register, the deadline, what records to keep and what you can call your business.
You can start straight away
gov.uk says you can start trading straight away without registering. You only have to register for Self Assessment once you earn more than £1,000 in a tax year from selling. Registering for Self Assessment is how you register as a sole trader.
The £1,000 is what customers pay you, before you take off your costs, not your profit. So a shop that takes £1,200 in a year has to register, even if most of that went on paying the supplier.
The government announced in October 2026 that the £1,000 is going up to £3,000 from April 2027. That still has to be passed into law, so until then, the £1,000 is the figure to go by.
The deadline
You must register by 5 October after the end of the tax year in which you went over £1,000. The tax year runs from 6 April to 5 April. So if your shop went over £1,000 between April 2026 and April 2027, you must register by 5 October 2027. If you register late, or don't register when you should, you may get a penalty.
What records to keep
From your very first sale, keep a record of every sale and every cost. For a dropshipping shop that means:
- Every sale. Your shop website keeps a list of orders, so download it regularly.
- Every payment to your supplier, with the receipt or invoice for each one.
- Your running costs: your shop website, your supplier app, card fees, your web address and email.
- Your bank statements.
You must keep your records for at least five years after the 31 January deadline for that year's tax return. gov.uk says you can use a personal or a business bank account for your business, so check with your bank which kind you can use. Keeping one account just for the shop makes your records much easier.
What you can call your business
You can trade under your own name or choose another name for your shop. As a sole trader, the name can't include "limited", "Ltd", "LLP" or "plc", can't be offensive, and can't be too like a trademark someone else owns. Some words need permission first, and gov.uk lists them.
Your own name and your business name have to go on your invoices and letters. Our guide to what your website must tell customers explains what has to go on your shop website.
You are personally responsible
A sole trader's business isn't separate from them. gov.uk says sole traders have unlimited liability, which means you are personally responsible for all the debts of the business.
VAT, and the next change
You must register for VAT if your sales go over £90,000 in any twelve months in a row. Our guide to VAT explains it. Separately, HMRC's Making Tax Digital is coming in for sole traders: if your income from selling is over £30,000, you will need to keep digital records and send updates to HMRC from April 2027.
Work out when you will reach the VAT line → How to start dropshipping in the UK →
