In this step-by-step guide, I’ll show you how to stop being self-employed and de-register with HMRC as well as closing your self-assessment in a way that avoids penalties.
I’ve updated this post on 18 November 2020 for changes in latest legislation
How to Cancel Self-Employment
Here are the steps you need to go through to de-register:
- Plan to let HMRC know
- Deregister as self-employed online or by phone
- Complete any outstanding self-assessment tax returns online
Letting HMRC know
If you are certain you want to cancel your self-employment with HMRC, then you must let them know either by phone or online. That’s because if you don’t tell them, they will continue to expect you to fill in a tax return online each year and issue penalties if they don’t get it on time.
How to De-Register as Self-Employed Online
You can cancel your self-employed online using HMRC’s Stopping Self-Employment form. Before you fill out the form it will help you to have your UTR number and national insurance number ready. You’ll also need to tell HMRC the date that you officially want to stop self-employment on the form, although HMRC are unable to accept a date earlier than 7 days before the date you stopped working for yourself.
How to Cancel Your Self-Employment By Phone
Alternatively, if you prefer you can call HMRC on 0300 200 3310 to discuss your self-assessment deregistration. Again you’ll need to have your UTR number and national insurance number ready so you can pass security.
Complete Outstanding Self Assessment Tax Returns
Once you have completed the stopping self-employment form, you may still need to bring your self-assessment to a close, even if you have moved onto other things. You’ll need to make sure you:
- File any outstanding and a final tax return online;
- Pay any outstanding tax and national insurance you owe;
- Declare your
self – employmentincome up to the date you deregister as self-employed and pay any tax due on it.
Remember the taxman can go back 6 years, so even when you have stopped being self-employed make sure you hold onto all your paperwork, in case HMRC decide to open up an investigation.
Harry was self-employed from 1 May 2018 to 31 August 2019. On 1 September 2019 he decides to stop being self-employed and take a full-time job on a PAYE basis. Harry completes the HMRC form to deregister as self-employed on 22 September 2019 and even he has cancelled his self-employment, he must still:
- Complete his self-assessment tax return with his self-employment income for 2018/2019 by 31 January 2019, along with paying any tax and national insurance due;
- Complete a final self-assessment tax return 2019/2020 with his self-employment income from 6 April 2019 to 31 August 2019 by 31 January 2020, as well as paying any tax and national insurance due;
- Include his gross earnings from his new full-time employment on the final 2019/2020 tax return in the employment section using the information on his P60 form which will be issued by his new employer.