Titel

Ceased being self-employed?

Publicatiedatum

28/07/2016

Categorie

HMRC notices

Bron

HM Revenue & Customs

Aard

Nummer

Samenvatting

It is important for taxpayers to follow the correct steps if they stop trading as a sole trader or are ending or leaving a business partnership. This is so that HMRC can help to get the taxpayer's affairs in order. Taxpayers that have ceased to be self-employed must inform HMRC of their change in status.

Taxpayers must send in a Self Assessment return by the relevant deadline and will need to work out their trading income, allowable expenses and any capital allowances. Taxpayers must also determine if they have any Capital Gains Tax to pay. In certain circumstances taxpayers may be able to claim back tax or National Insurance. It is also important to check if there is an entitlement to tax relief utilising: entrepreneurs’ relief, overlap relief and / or terminal loss relief.

Taxpayers that owe tax or National Insurance and have difficulty paying it, may be able to negotiate an agreement with HMRC for more time to pay.

In addition, where a VAT registration was in place this will also need to be cancelled and anyone who employed staff will need to close their PAYE scheme and submit final payroll reports.

Stop being self-employed

You must tell HM Revenue and Customs (HMRC) if you’ve stopped trading as a sole trader or you’re ending or leaving a business partnership.

You’ll need to send final tax returns and tell employees that you’re closing your business.

How to tell HMRC

Tell HMRC you’re stopping self-employment. They’ll cancel your Class 2 National Insurance contributions.

Tax returns

You must send a Self Assessment tax return before the deadline if you’re stopping trading as a sole trader or you’re leaving a business partnership.

When you send the return, you’ll need to:

· work out your trading income

· add up your allowable expenses - this may include some of the costs involved with closing down your business, eg phone, internet and postage costs of letting people know

· calculate your capital allowances, including any balancing charges if you’ve sold business equipment or machinery

· work out if you owe Capital Gains Tax on any assets you’ve sold or ‘disposed’ of

· calculate your final profit or loss

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

You can hire a professional (eg an accountant) if you need help with your tax return.

Tax relief

You may be able to reduce your final tax bill by claiming:

· Entrepreneurs’ Relief - this can reduce the amount of Capital Gains Tax you have to pay

· overlap relief - this can prevent you being taxed twice on your profits when you stop trading during a tax year

· terminal loss relief - this can offset a loss made in your last tax year against your profit in the 3 previous tax years

Find out more information about overlap relief and terminal loss relief.

There are other reliefs to reduce the amount of Capital Gains Tax that you may be able to claim.

VAT registration

You must cancel your VAT registration if you or your partnership are registered.

If you employ people

You need to close your PAYE scheme and send final payroll reports to HMRCif you stop employing staff.

If you’re insolvent

You’ll usually be personally liable for your business debts. Your creditors can take you to court or make you bankrupt if you don’t pay.

You might be able to find an alternative, eg an Individual Voluntary Agreement.

Construction Industry Scheme (CIS)

You must call the CIS helpline as soon as possible if you’re registered and stop trading as a contractor or subcontractor.

Last updated: 8 June 2016