An individual who carries on business as a sole trader is personally liable for all debts and obligations incurred by his or her business. All business debts can be enforced against the individual's personal property.
Particularly for sole trading businesses with risks of personal injury (such as caterers, hirers of equipment) or of negligence (such as a professional advisor) it is vital that these risks are insured.
The business profits are taxed as self-employed income, potentially at the present top rate of 45% plus National Insurance Contributions. The individual will be required to file a tax return before the relevant deadline each year and to pay tax in equal instalments, on 31st January and 31st July each year.