Tell HMRC you've stopped trading
Tell HMRC as soon as you stop trading as a sole trader or leave a partnership, and send a final Self Assessment tax return. If you are registered for the Construction Industry Scheme as a contractor or subcontractor, also call the CIS helpline as soon as possible.
Earliest notification date
No more than 7 days before you actually stop self-employment
Online notification
Complete the 'Stopping self-employment' form via Government Gateway
Telephone notification
Call HMRC Self Assessment helpline on 0300 200 3310
CIS contractors telephone
Call 0300 200 3210 to cancel CIS registration
Information required
National Insurance number and Unique Taxpayer Reference (UTR)
Earnings threshold for registration
Do not need to be registered if you earn £1,000 or less in a tax year
You must tell HMRC if you stop trading as a sole trader or leave a business partnership. If you do not notify HMRC, they will continue sending Self Assessment tax returns and may issue late filing penalties or create estimated tax bills.
Tell HMRC you have stopped being self-employed (opens in a new tab)
File your final Self Assessment return
Your final tax return covers the period from 6 April to your cessation date. Different deadlines apply depending on when you stopped trading.
Paper return deadline
31 October following the end of the tax year
Online return deadline
31 January following the end of the tax year
Payment deadline
31 January following the end of the tax year
Example (cease in 2024/25)
Paper by 31 October 2025, online and payment by 31 January 2026
You must submit a Self Assessment tax return for the tax year in which you ceased trading. This must include trading income from the start of your accounting period to your cessation date, plus any capital allowances, balancing charges, and terminal loss relief claims.
Self Assessment tax return deadlines (opens in a new tab)
Work out your final profits
Your final return taxes the profits of the tax year in which you stop, up to the date you stop. You may be able to include some costs of closing down, such as the cost of letting people know. If your business had overlap relief, the last return you could claim it on was the 2023 to 2024 return.
Reform effective date
Tax year basis from 2024/25, with 2023/24 as the transition year
Tax year basis
Profits for a tax year are the profits arising in that tax year
Final year
Profits from the start of the tax year to the date of cessation
Transition profit
If the business ceases on or before 5 April 2027, any transition profit not yet taxed is taxed in the year of cessation
Overlap relief
Cannot be used after the 2023/24 tax year
From 2024/25 the tax year basis applies to all self-employed businesses, so the final year runs from the start of the tax year to the date of cessation. Transition profit from 2023/24 was spread over the five years 2023/24 to 2027/28; if the business stops trading earlier, any part not yet taxed is taxed in the final year.
Work out your Basis Period Reform transition profit (opens in a new tab)
Calculate final capital allowances
Work out balancing adjustments on assets you owned. If you sell assets for more than their written-down value, you may have a balancing charge. If less, you get a balancing allowance.
Cessation rule
Enter balancing charge or balancing allowance instead of claiming capital allowances
Balancing charge trigger
Disposal proceeds exceed remaining pool balance
Balancing allowance trigger
Available for single asset pools or when closing business
Asset valuation rule
Use sale price, or market value if gifted, converted to personal use, or sold below value
In the year of business closure, standard capital allowance claims are replaced by balancing adjustments. A balancing charge is added to taxable profits if disposal proceeds exceed the pool balance. A balancing allowance is deducted from profits if there is unclaimed value from writing-down allowances.
Capital allowances when you sell an asset (opens in a new tab)
Claim terminal loss relief
If you make a loss in your final 12 months of trading, you can carry it back against profits from the previous 3 years. This can generate a tax refund.
Eligibility
Loss in the final 12 months of trading
Carry-back period
Loss can be carried back against profits of the same trade in the cessation year and 3 prior years
Order of set-off
Start with the most recent year first (LIFO)
How to claim
Include in Self Assessment tax return or write to HMRC
Claim deadline (2024/25 cessation)
5 April 2029
HS227 Losses helpsheet (opens in a new tab)
Reduce your payments on account
If your tax bill for the final year will be lower than last year's, you can ask HMRC to reduce your payments on account, online or with form SA303. If you reduce them and your bill turns out higher, HMRC charges interest on the difference.
How payments on account work and how to reduce them.
How and when to deregister for VAT, final return requirements, and what to do with stock on hand.
VAT on cessation
On your final VAT return, account for the stock and other assets you still hold on the cancellation date if you reclaimed, or could have reclaimed, VAT when you bought them and the total VAT due on them is over £1,000.
Notification deadline
Within 30 days of becoming ineligible
Deregistration threshold
Below £88,000 taxable turnover
Stock and assets rule
If VAT on remaining stock/assets exceeds £1,000, account for it on final VAT return
Processing time
HMRC typically requires 3 weeks to confirm cancellation
Record retention
Keep VAT records for 6 years after cancellation
Cancel your VAT registration (opens in a new tab)
Business Asset Disposal Relief
If you sell business assets when closing, you may qualify for Business Asset Disposal Relief (formerly Entrepreneurs' Relief). You must have owned the business for at least 2 years and dispose of the assets within 3 years of closing. Qualifying gains on assets disposed of from 6 April 2026 are taxed at 18%, up to a lifetime limit of £1 million.
Previous name
Entrepreneurs' Relief
CGT rate (before 6 April 2025)
10%
CGT rate (6 April 2025 to 5 April 2026)
14%
CGT rate (from 6 April 2026)
18%
Lifetime limit
£1,000,000 (cumulative, not annual)
Ownership requirement
Must have owned the business for at least 2 years
Asset disposal deadline
Within 3 years of cessation to qualify for relief
Claim deadline (2024/25 disposal)
31 January 2027
Business Asset Disposal Relief reduces Capital Gains Tax on qualifying business disposals by sole traders and business partners. You must have owned the business for at least 2 years and must dispose of assets within 3 years of ceasing to trade.
Business Asset Disposal Relief (opens in a new tab)
How long to keep tax records, bank statements, invoices, and receipts after you stop self-employment.
Records retention requirements
Different records have different retention periods. Tax records must be kept for 5 years minimum; some employment and contract records for longer.
Minimum retention period
At least 5 years from 31 January following the end of the relevant tax year
Example (cease in 2024/25)
Keep records until at least 31 January 2031
VAT records (if registered)
6 years from date of record
What to keep
Sales and income records, purchases and expenses, bank statements, Self Assessment returns
Self-employed record keeping (opens in a new tab)
Check your State Pension record
If you will not be working after you stop, you may have gaps in your National Insurance record. Check your State Pension forecast to see whether paying voluntary contributions would increase your State Pension.
Who can pay voluntary contributions and whether they would help you.
Final RTI submissions, P45s, and HMRC notifications when closing your payroll.
Key cessation deadlines
Missing deadlines triggers automatic penalties. Plan your closure timeline to meet all notification and filing requirements.
Notify HMRC of cessation
As soon as possible after stopping (no more than 7 days before actual cessation date)
Cancel VAT registration
Within 30 days of ceasing to be eligible
Final Self Assessment (paper)
31 October following end of tax year
Final Self Assessment (online)
31 January following end of tax year
Pay final tax owed
31 January following end of tax year
Terminal loss relief claim
5 April 4 years after end of cessation tax year
Business Asset Disposal Relief claim
31 January 2 years after end of tax year of disposal
Dispose of assets for BADR
Within 3 years of cessation
Keep business records
At least 5 years from 31 January after tax year end
Stop being self-employed (opens in a new tab)
Incorporate your business, transfer assets and VAT, and close your sole trader registration.