Government figures show that between 2010 and 2023, the number of sole traders (also known as sole proprietors) in the UK has increased by 380,000 - an increase of almost one in six (14%).

This rise reflects the growing trend of people choosing to set up businesses independently, with it being the simplest and most common business structure. Small business owners, freelancers, and self-employed professionals most commonly benefit from being sole traders.

While the terms "sole trader," "self-employed," and "limited company" are sometimes used interchangeably, they refer to different business structures with distinct legal and tax implications:

• Sole trader: An individual running their own business, personally liable for debts, with income taxed as personal earnings.
• Self-employed: A broader category covering sole traders, business partners, or limited company owners. Self-employed people are responsible for managing their own tax affairs.
• Limited company: A separate legal entity where the business's finances are distinct from personal assets, with profits subject to corporation tax.

The money.co.uk business bank accounts team has used the latest government figures to reveal which industries and regions of the country offer the best opportunities for aspiring sole traders.

How has the number of sole traders changed?

*previous year’s data not available

Between 2010 and 2015, the number of sole traders grew from 2.76m to 3.34m, a rise of over a fifth. Growth slowed from 2016, peaking at 3.54m in 2020 before a significant drop of 11% in 2021 due to the COVID-19 pandemic’s impact on small businesses. In 2023, numbers rebounded to 3.14m as the economy stabilised post-pandemic.

The industries with the most sole traders

The figures presented in this table reflect only those businesses registered for PAYE (Pay As You Earn) or VAT (Value Added Tax), so excludes sole traders and small enterprises that may not meet the registration thresholds. This means the number of businesses, especially sole traders, will be lower than the 'by year' table, which counts all businesses regardless of registration status.

1. Agriculture, forestry & fishing: 37.7%

Total businesses: 141,390

Sole trader businesses: 53,250

Agriculture, forestry, and fishing top the list, with over a third of all businesses in this sector operating as sole traders. This reflects the independent nature of the industry, where many people manage small-scale farms or fishing operations. The sector's reliance on personal expertise, land ownership, and specific skill sets makes it a good fit for sole trader businesses.

2. Transport & storage: 27.6%

Total businesses: 128,600

Sole trader businesses: 35,550

The transport and storage sector, including postal services, has the second-highest number of sole traders. Many of these businesses are couriers and people driving their own vehicles for work. The rise of e-commerce has boosted demand for delivery and logistics services, offering new opportunities for people to enter the market as sole traders.

3. Motor trades: 21.1%

Total businesses: 80,860

Sole trader businesses: 17,040

Motor trades, including vehicle repairs, sales, and servicing, also see a significant portion of businesses run by sole traders. This industry often involves specialised skills and customers who value personal service, making it work well for individual operators. The relatively lower capital requirements than other sectors also allow many to set up their own business.

The industries with the best survival rates for sole traders

*excluding activities of holding companies

The figures in this table reflect only those businesses registered for PAYE (Pay As You Earn) or VAT (Value Added Tax), so exclude sole traders and small enterprises that may not meet the registration thresholds. This means the number of businesses, especially sole traders, will be lower than the 'by year' table, which counts all businesses regardless of registration status.

1. Health

Leading the list with a five-year survival rate of 51.5%, the health sector has the strongest performance among sole traders. This could be due to the consistent demand for health-related services and a relatively stable market, which provides a consistently healthy environment for businesses to sustain and grow.

2. Property

The property sector is close behind, with a survival rate of 51.3%. This industry benefits from an ongoing demand for services such as property management, sales, and letting agencies. The steady demand for housing and commercial spaces makes it easier for sole traders to thrive in this sector.

2. Finance & Insurance

Finance and insurance also have a survival rate of 51.3%. These businesses often enjoy stable revenue streams and are less affected by market fluctuations than other industries. Regulatory frameworks and a solid customer base add to their resilience and survival.

The most profitable industries for sole traders

1. Health

The health sector leads the list with an impressive average annual turnover of £412,648. This suggests that many sole traders in this industry, such as private healthcare practitioners, consultants, and specialists, are performing exceptionally well.

The demand for private health services, from physiotherapy and dental services to wellness coaching and alternative therapies, likely contributes to this substantial turnover. More people could be seeking personalised healthcare and quicker access to services that might be otherwise delayed through the NHS.

2. Business administration & support services

Sole traders in business administration and support services achieve an average turnover of £349,630. This sector includes various services, including consultancy, administrative support, and human resources management.

The high turnover shows the value businesses place on outsourcing these services to specialists, which can streamline operations and improve productivity. With the rise of remote work and flexible business models, sole traders in this industry can offer tailored solutions to companies looking to adapt.

3. Wholesale

Wholesale businesses operated by sole traders generate an average turnover of £318,856, making it the third-highest sector. These businesses are essential in the supply chain, serving as middlemen between manufacturers, retailers, and customers.

The high turnover in this sector suggests a thriving demand for products and the potential for sole traders to operate effectively at scale. This may include businesses dealing in bulk goods, speciality products, or niche markets, which can command significant revenue streams.

The regions with the most sole traders

1. Northern Ireland

Northern Ireland ranks first, with a significantly high concentration of sole traders. The country has 28,085 sole trader businesses and a population of 1.9 million, equating to 147 sole traders per 10,000 people. This is nearly double the density of any other region in the UK, showing an unrivalled entrepreneurial spirit.

2. South West

The South West of England ranks second with 43,925 sole traders among a population of 5.8 million. This amounts to 76.2 sole traders per 10,000 people. The region’s picturesque landscapes and tourism industry could be contributing factors, as many sole traders are involved in hospitality, tourism, and local crafts, which thrive in this scenic part of the UK.

3. Wales

Wales comes in third with 23,620 sole traders and a population of 3.1 million, or 75.4 sole traders per 10,000 people. Wales's strong showing may be similar to the South West, with small businesses catering to tourism, agriculture, and local services. The country’s devolved economic policies and support for small businesses could also help encourage self-employment.

The most profitable regions for sole traders

1. London

London has the highest average turnover for sole traders, at £242,665. This is likely due to the city's vibrant and diverse business environment, which offers many opportunities for growth across various sectors, such as finance, technology, and the creative industries.

While there’s the potential for higher revenues in London, it’s a highly competitive market with higher running costs. This means more capital is required to start a business here, and smart planning is required to survive and reach this potential.

2. East

The East of England ranks second, with an average turnover of £207,111 for sole traders. This region has a mix of rural and urban economies with strong agricultural, technological, and manufacturing sectors. Its proximity to London and relatively lower operating costs than the capital might make this area attractive for sole traders to launch and grow their business.

3. South East

The South East comes in third, with an average turnover of £203,186. The region’s proximity to London and a strong economy driven by industries like pharmaceuticals, technology, and finance help support a thriving environment for sole traders. The area’s well-developed infrastructure and wealthy customer base also mean it is well set up for business success.

Case study

Brad built 4Networking, a business networking organisation, from the ground up. After 16 years of success, he recently sold his majority shareholding.

Brad Burton, Founder of Motivational Leader, comments: “Back in 2004, I walked out of a job - £25,000 in debt and no income. My wife was thrilled that I informed her how it would be alright, as I would start my own business - especially since it was seven days before Christmas.

“I thought running my own business would be all private number plates, fish tanks, and spinny chairs. The reality? Low sales, no sales [and] depression. To get by, I was even delivering pizzas at the weekend just to keep the business afloat. Here’s a tip: it will take you at least four times longer than your business plan says - that’s the reality.

“Fast forward a couple of years, I went from sole trader to my first employee, building up to 15 staff and a business worth over £2 million. Then the pandemic hit, and overnight, 90% of the business vanished—as you’d expect with a business network running meetings up and down the hotels and restaurants of the land.

“But I did learn something—no matter how things seem, you will always find a way. Two years ago, I sold all my interests in business networking and returned to being a sole trader. Now, 20 years on, this time, I’m all the wiser and leaning on the lessons I learned the first time around. I’ve surrounded myself with seven fantastic subcontractors, all sole traders, and we’ve built a virtual company together.”

Brad offers his tips for aspiring sole traders:

“As a sole trader, you quickly learn there’s no cavalry—only you. Nobody is coming to save you. Every moment, every penny counts. Treat your time and energy as significantly as you do your money.

“When you start, every deal matters. And remember—just because you invoice doesn’t mean you get paid. Chase your money. Because until it's in your bank, it isn't your money!

“When you start a business, it’s tight, and you need to recognise that. Capital will be limited, and you have to stretch every penny. It’s not about playing it safe. It’s about making sure every move you make counts.

“Financial stability takes longer than you think, probably four times longer, but you find a way, and that’s what being a sole trader is about.”

Cameron Jaques, money.co.uk business bank accounts expert, shares his tips on how to be a successful sole trader:

“Being a successful sole trader requires a mix of intelligent planning, strong money management, and effective use of business tools. Here are some essential tips:

• Separate personal and business finances: Open a business bank account to track income and expenses efficiently, simplify bookkeeping, and streamline tax filing. Look for accounts that offer invoicing, budgeting tools, and integration with accounting software.

• Manage cash flow and budgeting: Keep detailed records of all transactions using accounting software like QuickBooks or Xero. Regularly monitor your account, set aside funds for taxes, and plan for recurring and unexpected costs to maintain a healthy cash flow.

• Set a pricing strategy: Know your break-even point by understanding all business costs and setting competitive prices. Adjust your pricing as needed to reflect market conditions and business growth.

“By effectively managing your finances and using the tools offered by business banking products, you can build a strong foundation for success as a sole trader.”

Methodology

Number of sole traders by year sourced from the Department for Business and Trade’s business population estimates 2023 (table 27).

The following data was all sourced from the Office for National Statistics UK business: activity, size and location data:

• Number of sole traders by industry, calculated as a % of total businesses in each industry (table 13)
• Average turnover of sole traders by industry (table 13)
• Number of sole traders by region, calculated as a % of total businesses in each industry (table 13)
• Average turnover of sole traders by region (table 13)

Turnovers were estimated by assuming that the midpoint of each turnover size band represents the average turnover for that band. These were multiplied by the number of companies in each size band, and an average was calculated.

Survival rates were sourced via a data request to the Inter-Departmental Business Register (IDBR), which can be viewed here.