Starting your business on the side is one of the lowest-risk ways to test an idea, build a customer base and keep the rent paid while you learn. ONS labour market data shows that UK self-employment has recovered strongly since the pandemic, and many women now begin by running a venture alongside paid employment. According to Women in Business: Key UK Facts, women are a growing share of the UK self-employed workforce.
But this dual existence is not an easy path. I know because I have lived it, both with my own business and while helping a friend launch hers.
For six short but very long weeks, I became a front-of-house assistant by day in my friend’s new wellbeing studio in Leeds and a business owner by night. It was a full and tiring life. Yet there were moments of real fun, such as when an elderly client told me I was doing a great job and, assuming I was a temp looking for permanent work, touched my arm and said she was sure I’d be “snapped up” and not to worry. Good to know.
Working the two roles was a stretch, but I learned a great deal. I was reminded how much I like working with people. When you work from home, the four walls can close in and you can tire of your own company.
Most of all, I watched my friend blossom. As she gained confidence not only in her ability to run a business but in the fact that people actually wanted to pay for her services, her whole energy changed. We all have doubts, especially at the beginning when everything is new.
Why starting your business on the side still makes sense in 2026
A side business lets you validate demand, refine your offer and build savings before you give up a salary. For women, who still face a gender pay gap that PwC’s 2024 Women in Work Index estimated could take around 30 years to close at current rates, keeping earned income while you grow can be a sensible risk-management strategy. It also gives you time to work out whether self-employment suits your working style, caring responsibilities and long-term goals.
Check the legal and financial basics first
Before you take on your first paying customer, make sure the foundations are solid. Start by reading your employment contract. Many UK employers include clauses about outside business interests, confidentiality, intellectual property and non-compete restrictions. ACAS guidance makes clear that while you generally have the right to run a side business, your contract may limit activities that compete with your employer or use company resources. If your side business could conflict with your day job, speak to your employer or HR team before you begin.
You must also tell HMRC about any self-employed income. If your trading income is above the £1,000 tax-free trading allowance set by HMRC, you will need to register for Self Assessment and file a tax return each year. For the 2025/26 tax year, Class 2 National Insurance contributions are £3.50 a week if your profits are above the small profits threshold of £6,725. Class 4 NICs are 6% on profits between £12,570 and £50,270, then 2% above that. Factor these into your cash-flow forecasts from the start, and check HMRC’s current rates each tax year.
If you decide to trade through a limited company, you must register with Companies House and complete identity verification for all directors, a requirement introduced under the Economic Crime and Corporate Transparency Act 2023. You will also need to understand Corporation Tax, which for the 2025/26 financial year is charged at 25% on profits over £250,000, with a small profits rate of 19% for profits up to £50,000 and marginal relief in between. From April 2026, Making Tax Digital for Income Tax Self Assessment becomes mandatory for sole traders and landlords with income over £50,000, so digital record-keeping is no longer optional for larger side businesses.
It is also worth checking whether you need insurance, public liability, professional indemnity or product liability, and whether you need any licences or permits for your particular sector. A little homework now prevents expensive surprises.
When to leap into your business full-time
One of the biggest decisions is when to move away from the comfort and cushioning of your salary and leap into your business full-time. How do you know when the time is right?
While it is often said that if you pursue your passion the money will follow, that is not always the case. So take a long, hard look at your finances and your realistic ability to make ends meet before handing in your notice.
Do the maths. Work out what you need to live on each month, including rent or mortgage, council tax, utilities, food, transport, childcare and any debt repayments. Then look at what you have saved. Most advisers recommend having at least six months’ worth of essential living costs set aside, otherwise you put yourself at serious financial risk.
Study your business data. How many clients or customers do you have? What is their average spend? How many are repeat buyers? Do you have the processes in place to handle growth? Do you have a marketing plan to promote your business with more vigour than in the past? And, perhaps most importantly, do you have the tenacity to stick with it when orders are slow?
How to handle ambiguity while you grow
If you are staying in the same industry but moving towards freelance work, find out whether your current employer would be willing to give you a contract. That is what I did when I started my consulting business. They knew my work and what I could deliver, and it gave me a valuable kick-start.
Be aware, though, that if you operate through a limited company, you need to understand the UK’s IR35 and off-payroll working rules. These determine whether you are genuinely self-employed for tax purposes. Getting the status wrong can be costly, so seek advice if you are unsure. Our IR35 guide for women contractors explains the key tests.
Over time, my own consulting practice bankrolled a women’s enterprise project I ran on the side. The consulting generated more revenue, but the project was where my heart was and where I could see I was making a difference. Two years down the road, I packed in the consulting to focus all my energies on the business that had become my passion.
Funding and support for women founders
You do not have to fund everything from your salary. The British Business Bank’s Start Up Loans programme offers personal loans of up to £25,000 for early-stage businesses, with fixed interest rates and free mentoring. The Women Backing Women Fund, launched following the Alison Rose Review of Female Entrepreneurship, is also deploying capital specifically to support women-founded businesses in the UK.
For free guidance, HMRC’s online tax support, ACAS workplace advice, your local Growth Hub and Prowess resources can help you build your online presence, understand tax obligations and connect with other women founders.
Five practical steps to start this week
- Read your employment contract and speak to HR if your side business overlaps with your day job.
- Register with HMRC as soon as your trading income exceeds the £1,000 trading allowance.
- Choose the right business structure and understand the tax, NIC and reporting obligations.
- Build a six-month financial runway before you consider going full-time.
- Track your customers, repeat business and marketing results so you can make the leap with data, not hope.
Make the leap when the data says yes
Starting your business on the side is one of the smartest ways to reduce risk while you prove your idea. With the right UK groundwork, a clear financial plan, compliance with HMRC and your employment contract, and a marketing strategy that can scale, you can make the leap with confidence when the time is right.
