How Do I Tell HMRC I Have Stopped Being Self-Employed?

Stopping self-employment feels straightforward. You stop working for yourself, perhaps you take a job, and you assume HMRC will figure it out. They will not. Unless you formally notify HMRC that you have ceased trading, they will continue to expect a Self Assessment tax return from you every year, and they will issue penalties if you do not file one.

This guide explains exactly what you need to do when you stop being self-employed, step by step, and what happens if you do not do it correctly.

Why You Must Notify HMRC

Once you are registered for Self Assessment, HMRC expects you to file a return every year indefinitely until you tell them to stop. The system does not automatically detect that your circumstances have changed.

If you stop filing because you no longer consider yourself self-employed but you have not formally deregistered, HMRC will:

• Issue automatic late filing penalties (£100 from the day after the deadline)
• Add daily penalties after three months (£10 per day, up to £900)
• Issue further penalties at six months and twelve months
• Eventually pass your case to a debt collection team

When Should You Notify HMRC?

You should tell HMRC as soon as possible after you stop trading. HMRC asks that you notify them by 5 October following the end of the tax year in which you stopped trading.

So if you stopped trading in February 2026 (which falls in the 2025/26 tax year, ending 5 April 2026), you should notify HMRC by 5 October 2026. You will still need to file a final Self Assessment return for 2025/26 by 31 January 2027.

If you stopped trading several years ago and never told HMRC, the same process applies: notify them now, file any outstanding returns, and resolve the penalty position.

How to Tell HMRC You Have Stopped Being Self-Employed

People describe this in different ways: "unregistering as self-employed", "de-registering from Self Assessment", or telling HMRC you have "ceased trading". They all mean the same thing. There is one process, the official route is through GOV.UK, and there is no separate form called "unregister as self-employed". Here are the three ways to do it:

Your Final Self Assessment Return

Stopping self-employment does not eliminate your obligation to file a return for the tax year in which you stopped. You must file a final Self Assessment return covering your income and expenses up to the date you ceased trading. For a full walkthrough of that final return, including how to reclaim overpaid payments on account, see our guide to your final Self Assessment tax return when you stop trading.

On your final return, declare:

• All self-employment income received up to the cessation date
• All allowable expenses incurred up to that date
• Any outstanding stock, equipment, or assets disposed of on cessation (which may have capital allowance implications)
• Any overlap profits if you were using the traditional accounting basis

If you switched from self-employment to employment in the same tax year, your employed income (from your P60 or P45) also goes on the same return.

What Happens to Your Class 4 National Insurance

Class 4 NI is calculated on your self-employment profits and included in your Self Assessment calculation automatically. When you cease trading, your final return will include Class 4 NI for the proportion of the year you were trading.

VAT Deregistration: A Separate Step

If you were VAT registered as a sole trader, stopping self-employment means you must separately deregister for VAT. This does not happen automatically when you notify HMRC about Self Assessment.

To deregister for VAT:

• Submit VAT form VAT7 online through your VAT account on the HMRC website
• Your effective date of deregistration can be the date you ceased trading
• You must file a final VAT return covering the period up to deregistration
• Any VAT on stock or assets you still hold at deregistration may need to be accounted for (this is called the "deemed supply" rule; seek advice if your stock value is significant)

PAYE: If You Had Employees

If you employed anyone in your business, you need to formally close your PAYE scheme. Submit final Real Time Information (RTI) payroll submissions, issue P45s to all employees, and notify HMRC through your PAYE online account that the scheme is closing. HMRC's Business Payment Support helpline can assist if you are unsure of the process.

Penalties for Not Notifying: And What to Do About Them

If you have received penalties for late or missing Self Assessment returns after stopping self-employment, you may be able to have them cancelled.

The grounds for appeal are:

• You had a reasonable excuse for not filing (for example, you were unaware you still needed to file after ceasing trading, which is one of the more commonly accepted grounds)
• You notified HMRC promptly once you became aware of the issue

File all outstanding returns as soon as possible, then submit an appeal using HMRC form SA370 online, or through your Government Gateway account.

Frequently Asked Questions