Are you going back to full-time work and want to know how to de-register as self-employed, or maybe you're retiring after a successful solo career? You'll be pleased to know that letting HMRC know about your change in circumstances is a straightforward process, but an important one nonetheless.

Going back to full-time employment?

If you're stopping self-employment, you'll need to let HMRC know. The simplest and recommended way to do this is to de-register as self-employed online.

You'll need the following to hand:

• Your National Insurance Number
• Unique Tax Reference (UTR)

HMRC are open Monday to Friday: 8am to 6pm. Typically phone lines are less busy before 10am Monday to Friday.

Deregistering as self employed: the basics

The steps you need to take when leaving self-employment can vary based on your future plans, but there are some common procedures that everyone must follow. You don't necessarily need to have another job or business lined up. Some individuals may find that their income is too low to make being a Sole trader worthwhile and choose to deregister. If you're in this situation, you can find guidance on how to inform HMRC that you no longer need to complete a tax return here.

To de-register as a self-employed person, you will need to do the following:

1. Tell HMRC you're no longer self-employed
2. Submit a final Self Assessment
3. Cancel VAT registration if required
4. Deal with any insolvency issues

These steps are explained in further detail below.

1. Tell HMRC you’re no longer self-employed 

The first step is easy – you just need to log into your Government Gateway account via HMRC's site and tell them you're stopping self-employment. To do this, you'll need your National Insurance Number and Unique Taxpayer Reference (UTR). You'll need to tell them the date you stopped being self-employed, which is important as it impacts potential taxes you have to pay.

2. Submit your last Self Assessment 

You must submit a final Self Assessment tax return for the tax year in which you stopped trading, making sure to meet the deadline. You'll need to do this in the same fashion as in previous years, detailing total income minus any allowable expenses to work out your final profit. If you're selling or disposing of assets related to your business, you might have to pay Capital Gains Tax, so be sure to include them on your return.

You can, however, reduce your potential tax bill by claiming a few additional reliefs called overlap relief and terminal loss relief. Visit this HMRC page to learn more about them.

A note on Making Tax Digital (MTD)

A major change is coming for the self-employed. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) will require sole traders and landlords to keep digital records and submit quarterly updates to HMRC using compatible software.

The rollout is phased:

• From 6th April 2026: Mandatory for those with a qualifying income over £50,000.
• From 6th April 2027: Mandatory for those with a qualifying income over £30,000.

While you are stopping self-employment now, it's crucial to be aware of MTD if you decide to become your own boss again in the future.

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3. Cancel VAT registration

If you're VAT registered, you must cancel your registration with HMRC to avoid future charges. While some business structures have trickier rules, it's straightforward for self-employed people – you can do it online via this link.

4. Deal with insolvency issues

If you're stepping down from self-employment due to debts, it's important to recognise that de-registering as a sole trader doesn't make them disappear. You are personally liable for business debts and can be taken to court or made bankrupt.If you have unresolved debts and are ending your self-employment because you're not earning enough to repay your creditors, don't wait for things to escalate. It might be beneficial to negotiate an Individual Voluntary Arrangement, or IVA.

What if you're returning to employment?

If you're deregistering as self-employed to step back into traditional employment, you still need to follow the steps above. However, because de-registering as a sole trader doesn't generate a P45, you can't give one to your new employer for them to set your PAYE tax code.

Instead, you'll have to complete a "Starter Checklist" (which replaced the old P46 form). This asks for information about your recent employment history, other jobs, loans, and benefits. Your new employer will pass this to HMRC so you can be assigned the correct tax code.

What to do if you're leaving the construction industry?

If you're leaving the construction trade and you're registered with the Construction Industry Scheme (CIS), you'll need to contact them to let them know you're no longer working as a contractor or subcontractor. You can call the CIS helpline Monday-Friday between 8am and 6pm on 0300 200 3210. Remember that phone lines may be subject to seasonal closures, and you cannot use the phone to register for CIS. You can find other contact methods here.

Converting from a Sole Trader to Limited company

Even though owning a Limited company is just another form of self-employment, HMRC still requires you to de-register as a Sole Trader in the same way we've covered above. You can register the limited company before you stop trading as a Sole Trader, but you should de-register as soon as you can.

If you have business assets as a Sole Trader that you want to transfer, you'll need to 'sell' them to your new company. This can be done through a Director's Loan – but it will affect capital allowances and capital gains taxes as part of your final sole trader Self Assessment. Speak to an accountant to help make this transition as smooth as possible.

Looking to close your Limited company?

It's easy to confuse de-registering as self-employed with closing a Limited company, since people running Limited companies are still often called 'self-employed'. Though this guide has mainly focused on closing down as a Sole trader, it's also fairly straightforward to shut down a limited business. Check out our handy and informative article "How to close a limited company down – Your options".

Need help with your final tax return?

If you're reading this because your business journey is coming to an end, we can help make sure your final Self Assessment is filed correctly and on time. With over 15 years of experience supporting the UK's self-employed, we've helped over 37,912 businesses manage their finances.

For a fixed fee, our expert accountants can take care of your final return for you. We're currently offering our Self Assessment filing service for just £200 +VAT for new customers until 31st August 2025.

And if you decide to have another go at being your own boss in the future, our Sole Trader Pro plan gives you everything you need. For just £27 + VAT per month, you get MTD-ready software, unlimited accountancy support, and your annual Self Assessment filed for you.