Closing Your Business: Final Tax Return & Obligations

Tell HMRC You’ve Stopped

You must tell HMRC as soon as you stop being self-employed. You can do this:^[1]

• Online through your Government Gateway account
• By phone on the Self Assessment helpline (0300 200 3310)

This deregisters you from Self Assessment for self-employment, though you may still need to file if you have other untaxed income.

File Your Final Tax Return

Your final Self Assessment return covers the period from 6 April to the date you stopped trading. The normal filing deadline applies (31 January following the end of the tax year).^[2]

Make sure you tick the box on your SA103 indicating that you’ve ceased trading and enter the date you stopped. The final return can be filed online with HMRC-recognised software.

Final Year Expenses

You can claim allowable expenses up to the date you stopped. This includes the costs of winding down: final professional fees, cancellation charges, and any ongoing obligations.^[1]

Capital Allowances on Cessation

When you stop trading, a balancing adjustment is made on any assets you claimed capital allowances on:^[4]

• If you sell an asset for more than its tax written-down value: a balancing charge (taxable)
• If you sell for less: a balancing allowance (tax deduction)
• If you keep the asset: it’s treated as sold at market value

Selling Business Assets

If you sell business assets at a profit, Capital Gains Tax may apply. However, Business Asset Disposal Relief can reduce the CGT rate to 18% on qualifying gains up to a £1 million lifetime limit.^[5]

To qualify, you must have owned the business for at least 2 years before selling.

VAT Deregistration

If you’re VAT registered, you must deregister within 30 days of stopping trading. You may need to account for VAT on stock and assets held at deregistration (if their total value exceeds £1,000).^[1]

Keeping Records After Closure

Even after closing your business, keep all records for at least 5 years from the 31 January filing deadline of your final tax return. HMRC can still enquire into closed-year returns within this period.^[2]

National Insurance

Class 2 and Class 4 NI contributions stop when you cease self-employment. Check your National Insurance record to ensure you have enough qualifying years for the full State Pension.^[1]

Further Reading

• Capital Gains Tax: The Basics
• How to File Your Tax Return
• National Insurance for Self-Employed