How to deregister from Self-Assessment

May 27, 2021

How to stop being self-employed 

When you are trading as a sole trader, or you are ending or leaving a business partnership, you must: 

  • Inform HM Revenue and Customs (HMRC) and deregister for self-assessment. 
  • Send a final tax return. 

How to inform HMRC you have stopped being Self-Employed 

There are two ways you can use to notify HMRC when you stop self-employment. They include: 

  1. Calling HMRC on 0300 200 3310. However, if you were working in construction (CIS), you can call 0300 200 3210 instead. 
  2. Deregister as Self-Employed Online using HMRC’s stopping self-employment form. To fill the form, you will need your UTR number and national insurance number. Remember that the deregistration form will require you to add the date you officially want to stop self-employment. Nonetheless, HMRC cannot accept a date earlier than seven days before the date you stopped being self-employed. 

What happens if you do not notify HMRC? 

If you do not inform HMRC you have stopped being self-employed (after you have stopped trading), HMRC will continue sending you self-assessment tax returns. If you ignore these returns you will be liable for late filing penalties.  

Additionally, HMRC may create an estimated tax bill if you do not complete and submit the tax returns on time.  These estimated debts are legally due and can only get displaced by sending in a tax return within three years of the filing date for the return.  

Sending a final tax return 

When you send the final return, you must: 

  • Work out your trading income 
  • Add up your allowable expenses – including costs involved with closing your business, like internet and postage costs of letting people know. 
  • Calculate your capital allowances, including any balancing charges if you have sold business equipment or machinery. 
  • Work out if you owe Capital Gains Tax on any assets sold or ‘disposed of’. 
  • Calculate your final profit or loss. 

Contact an accountant to get help with your tax return now! 

If your partnership is ending, the nominated partner should send a final Partnership Tax Return by the deadline. 

Can I get Tax relief on my final tax return? 

Yes, you can reduce your final tax bill by claiming: 

  • Entrepreneurs’ Relief  
  • Overlap relief – It protects you from being taxed twice on your profits when you stop trading during a tax year. 
  • Terminal loss relief – It can offset a loss made in your last tax year against your profit in the three previous tax years. 
  • Other relief to reduce the amount of Capital Gains Tax that you may be able to claim. 

Self-employment deregistration instances to remember 

Depending on your case, you must do the following: 

VAT registration 

Remember to cancel your VAT registration if you or your partnership are registered. 

Employer 

Close your PAYE scheme and send final payroll reports to HMRC if you stop employing staff. 

Insolvent 

You will be liable for your business debts. Your creditors can take you to a court or make you bankrupt if you do not pay. 

However, you might be able to find an alternative payment option- like an Individual Voluntary Agreement. 

Construction Industry Scheme (CIS) 

Call the CIS helpline as soon as possible if you are registered and stop trading as a contractor or subcontractor. 

What happens after deregistration 

Once you deregister from Self-assessment, HMRC will: 

Contrarily, you should: 

  • Keep your records for six years. 
  • Ensure that HMRC has your correct address for the 12 months after you file your tax return. 

How can Spondoo Accountants help with deregistration as self-employed? 

Our self-assessment team can help by: 

  • Filing your Self-Assessment. 
  • Informing HMRC, you will no longer be self-employed. 
  • Notify HMRC that you don’t need to submit a tax return next year. 

Contact us now for your self-assessment needs. 

 

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Information provided on the site is merely guidance that may change in line with UK law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Spondoo is a trading name for Accounting SQL Limited, authorised & license accounting firm under the Institute of Financial Accountants.

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