Self-employment isn’t right for everyone. But whatever your reason is to stop being self-employed, there are some important steps you need to take to close things off with HMRC and avoid penalties.
Here’s a step-by-step guide to help you stop being self-employed and deregister with HMRC.
Why Do You Need to Let HMRC know that You Are Stopping Self-Employed?
When you registered as self-employed, HMRC began to expect a self-assessment tax return from you by the 31 January each year.
You need to let HMRC know that you are stopping self-employment so that they know to no longer expect a self-assessment tax return and tax payments.
Failing to let them know may result in penalties if you miss a self-assessment filing deadline.
How to De-Register as Self-Employed with HMRC
Firstly you’ll need to contact HMRC to let them know that you are stopping self-employment.
You can deregister as self-employed online using their “Stopping Self-Employment” Form.
Before you fill out the for to deregister it will help you to have your
You’ll also need to tell HMRC the date that you stop self-employment.
Note: HMRC are unable to accept a date earlier than 7 days before the date you stopped self-employment.
Alternatively, if you prefer you can call HMRC on 0300 200 3310.
What Happens Once You De-Register as Self-Employed
Once you have completed the deregistration form, you may still have some legal obligations to fulfil.
Even if you are no longer self-employed and have moved onto other things, you’ll need to make sure you:
- File your final self-assessment tax return;
- Pay any outstanding tax and national insurance you owe;
- Declare any
self – employmentincome up to the date you deregister as self-employed;
- Pay tax and national insurance on any self-employment income up to the date you deregister as self-employed.
An example of how to deregister as self-employed
Harry was a Self-Employed Uber driver from 1 May 2017 to 31 August 2018.
On 1 September he went from employed to self-employed and took a full-time job as a Private Driver on a PAYE basis.
Harry completes the form to deregister as self-employed on 22 September 2018.
Even though Harry has now cancelled his self-employment, he must still:
- Complete his self-assessment tax return with his income as an Uber driver during 2017/2018. This is due by 31 January 2018 along with paying any tax and national insurance due;
- Complete a final self-assessment tax return 2018/2019 with his Uber income from 6 April 2018 to 31 August 2018. This is due by 31 January 2019 as well as paying any tax and national insurance due.
- Harry must include his gross earnings from his employment on the final 2018/2019 tax return (in the employment section). This gives HMRC a full picture of his employment status. He can find all this information on his P60.
Updated 16 July 2019