Notify HMRC when you cease self-employment

When taxpayers cease self-employment, they must notify HMRC to update their records and ensure their affairs are properly settled. This applies to those who stop trading as sole traders or leave a business partnership.

Taxpayers are required to submit a self-assessment return by the relevant deadline, where they’ll need to calculate their trading income, allowable expenses, and any capital allowances. They must also determine if any Capital Gains Tax (CGT) is due. Additionally, they may be eligible to reclaim overpaid tax or National Insurance contributions.

It’s essential to explore whether any tax reliefs, such as Entrepreneurs’ Relief, Overlap Relief, or Terminal Loss Relief, apply. These reliefs can help reduce CGT liability. Furthermore, taxpayers who owe tax or National Insurance but are struggling to pay may be able to negotiate a payment plan with HMRC.

If the taxpayer was registered for VAT, they must also cancel their registration. For those who employed staff, the PAYE scheme must be closed, and final payroll reports need to be submitted.

By following these steps, taxpayers can ensure a smooth transition when ending self-employment and avoid any unnecessary complications with HMRC.