If you are planning to go back to a full time job or even if you are retiring from a successful solo career, it is important to de-register yourself as self-employed. It is an important and easy process to let the HMRC know about your current situation. When you are de-registering as self employed, the things you need to handover are your National Insurance number and Unique Tax Reference(UTR).
You are required to sign off from the list of self-employment if you are not self-employed anymore. You can write an official letter to HMRC or use the online form to announce that you are not self employed anymore as soon as possible. There is no way HMRC can know by itself that you are no longer self employed because now you are working as an employee or are claiming for work benefits. You can ask any professional accountant UK provides for helping you with the issues.
These are the steps you should follow when you stop being self employed:
- It is important to notify HMRC immediately as you stop being self-employed. You can send a letter to them or can fill up an online form.
- If you have a registration for VAT, you might consider cancelling the VAT registration.
- If you have been working for a construction industry and now have left it for some reason then you are required to inform HMRC on the Construction Industry helpline.
- Remember to prepare tax return so that you can cover the last period of trading. But you can do this only at the end of the tax year.
- You should take advice from a professional before selling your business, business asset or business property because you have a pretty good chance of making a capital gain.
- If there is any outstanding tax pay it immediately.
- Don’t throw away your business records at least for 6 years. You might need them for any tax advantage.
- Make sure that you provide your correct current address to HMRC at least for 12 months after you submit the final tax return. If you are shifting somewhere within this 12 months you are required to inform HMRC about your new address.
What will happen if you do not notify HMRC?
If somehow you do not inform HMRC about not being self-employed anymore, you will see that HMRC will continue sending you self-assessed tax returns even after you have stopped trading as they will not know that. Now if you do not bother about these returns, you become liable for penalties. If you are not submitting or completing the tax returns on time, HMRC will prepare an estimated tax bill on its own. Now the estimated tax bill which they have prepared become legally due and can only be dismissed if you are able to send a tax return within 3 years starting from the filing date for the return. If the time limit crosses, it might not be possible to modify or make corrections in the bill.
For this you can take help from the accountant services firms UK has. There are ways to reduce your final tax bill if you can claim:
Entrepreneur’s Relief – this allows you to minimise the amount of Capital Gain Tax you are required to pay.
Overlap Relief – this will save you from paying the tax twice on your profit if you stop trading somehow during a tax year.
Terminal Loss Relief – this will cancel out the loss which you went through in the last tax year depending on the profit you made on the previous 3 tax years.