Find out the steps to take to stop being self-employed, letting HMRC know that you need to de-register for self-assessment and wrapping up the tax side of things.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
How to Stop Being Self-Employed
There are three steps to take if you want to tell HMRC you are no longer self-employed:
- Notify HMRC that you want to cancel your self-employment
- Fill in any outstanding tax returns to the date you end being self-employed
- Pay any sole trader tax you owe
Once you have deregistered for self-assessment your UTR number will be cancelled. If you ever want to go back to self-employment you’ll be issued with a new UTR number, unless you fill in a tax return for another reason.
1. How to De-Register as Self-Employed Online
You can let HMRC know that you want to cancel your self-employment registration by going online and filling in HMRCs ‘Stopping Self-Employment’ form.
On the form, you’ll be asked to provide the date that you officially want to stop self-employment. HMRC is unable to accept a date earlier than 7 days before the date you stopped working for yourself.
Alternatively, you can call HMRC on 0300 200 3310 to discuss your situation.
2. Completing Outstanding Tax Returns
Once you’ve notified HMRC that you are no longer self-employed, you’ll still need to complete any outstanding tax returns to declare your income up to the date you de-registered as self-employed.
Even if you are no longer working for yourself, you may find yourself needing to fill in tax returns for previous tax years and paying any tax owed.
3. Pay Outstanding Sole Trader Tax
In addition to completing any outstanding tax returns to the date you de-register as self-employed, you’ll need to pay any tax you owe. There are penalties for failing to pay what you owe and HMRC will continue to chase you for any outstanding amounts even if you are no longer working for yourself.
HMRC can still have the power to investigate your tax affairs going back six years, even when you have cancelled your self-employment. So keep all your business records safe.
Here’s an example:
Penny registered as self-employed on 1 May 2022. On 1 September 2023, she decides to stop self-employment and take a full-time job receiving a payslip.
Penny completes the HMRC form to stop self-employment on 22 September 2023. Her next steps are:
- File a tax return for 2022-23 by 31 January 2024 declaring her self-employment earnings from 1 May 2022 to 5 April 2023 and pay any tax she owes by this date;
- Complete a final tax return for the tax year 2023-24 by 31 January 2025 to declare her self-employment income from 6 April 2023 to 1 September 2023; and pay any tax she owes by this date.
When Penny completes her final tax return for 2023-24, she’ll need to include her earnings from her job in the employment section of the return. She’ll find the information she needs on her P60.
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