I’ve updated this post on 24 June 2020
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 de-register with HMRC.
How to Let HMRC know that You’re 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.
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.
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.
New Here? Learn how to set up the financial side of your business with these easy to understand guides and resources:
- Sole Trader or Limited Company? – Download my free calculator to check which business structure would help you to pay less tax;
- Tax Records and Bookkeeping – Understand what tax records you’ll need to keep and how to set up your own bookkeeping system;
- Self Employment Taxes Explained – Learn what taxes you’ll pay, how much and when;
- VAT Guides – From registration to de-registration, VAT schemes and thresholds, these guides will take you through the basics every UK small business owner needs to know;
- Invoice Template – Free template and step-by-step guide so you can get paid by your clients.