There’s lots of information out there about how to register for different types of tax like Self Assessment, Corporation Tax, and VAT – but what happens if you want to deregister?

You might decide to work for an employer who takes care of your taxes, sell your company and no longer need to pay Corporation Tax, or cease trading altogether and no longer need to be VAT registered, for example. Whatever your reason, we’ll go through the types of taxes businesses pay, and how you can deregister if you need to.

How do I deregister from tax as a sole trader?

One of the main reasons you may want to deregister from tax is that you no longer want to be self-employed. This could be because you’re going into employment, or you know you’ll earn less than the £1,000 trading allowance from self-employment the following tax year.

Contact HMRC

The first thing you need to do is tell HMRC you no longer need to submit a tax return. If HMRC agrees with you, you’ll receive a letter in the post confirming this.

 
You can contact HMRC by filling out an online form, using HMRC’s online digital assistant, or by phone or post.

If the reason you’re deregistering is because you expect to earn less than the £1,000 Trading Allowance, you’ll need to inform HMRC by the 5th of April (at the end of the tax year).

Submit your final Self Assessment

You need to file one last tax return before you say goodbye to self-employment! This must cover the period up until you stopped being self-employed, and needs to be completed before the deadline if you’re a sole trader. You’ll also need to include:

• Your final profit or loss figures
• Your trading income
• Any allowable expenses – including any costs resulting from closing the business, such as postage fees relating to letting people know
• If you owe Capital Gains Tax on any assets you’ve either sold or ‘disposed’ of
• Any claims for Capital Allowances – this includes balancing charges you may have if you’ve sold business equipment

We understand this involves a lot of calculations – which need to be accurate. Speak to your accountant if there’s anything you’re unsure of!

How do I deregister from tax as a partnership?

Deregistering from taxes in a partnership is similar to deregistering as a sole trader, but the nominated partner will also send a final Self Assessment tax return on behalf of the partnership by the normal reporting deadline.

• If the partnership is VAT registered: You can update the partnership’s details through the VAT account
• If the partnership is not VAT registered: Let HMRC know about any changes in the partnership’s Self Assessment tax return

How do I deregister from tax as a limited company?

Limited companies are a separate legal entity to their owners, so closing one can be a bit more complicated. For instance, as well as dealing with the company you might also need to consider your own Self Assessment tax returns if you receive dividends, or PAYE if you receive a salary through the company.

Closing down your limited company

The first thing you’ll need to do is apply to close your limited company. The process for this depends on whether or not your company can still pay its bills. If it can (meaning the company is ‘solvent’), then you could:

• Apply to have the company struck off the Companies Register
• Or start a member’s voluntary liquidation

If your company cannot pay its bills, it’s ‘insolvent’. In this instance, the interest of the people your company owes money to (i.e., creditors) legally comes first before directors and shareholders.

 
You will normally need to:

• Prepare and submit the company’s final statutory accounts, and state these are the final trading accounts and that the company is soon to be struck off
• Submit the final Company Tax Return
• Pay any Corporation Tax you owe as well as any outstanding tax liabilities

You may also be able to let your company become dormant if you’re no longer trading or carrying on business activity, but don’t want to close it completely.

Deregistering for Self Assessment after you close your limited company

If you receive income from other sources, then closing your limited company doesn’t necessarily mean you need to stop submitting Self Assessment tax returns. In the flurry of dealing with your company, don’t forget to think about what this means for your personal tax!

If necessary, contact HMRC if you believe you no longer need to send a tax return. This is the exact same process as a sole trader and partnership – HMRC will contact you to confirm whether you need to send one or not.

Deregister for PAYE if you stop being an employer

There are many reasons you may need to deregister from PAYE. For example, if your sole employee has left and won’t be replaced, or because you’re closing your company and will no longer take a director’s salary.

The first thing you’ll need to do is let HMRC know you’ve stopped employing people, followed by a final PAYE submission – either an FPS (Full Payment Submission) or an EPS (Employment Payment Summary).

If you do employ anyone again in the next tax year, you can reopen your PAYE scheme by sending an FPS (Full Payment Submission) using your PAYE reference. You’ll need to submit an EPS to let HMRC if there are any months where you are not paying staff.

What if I’m VAT-registered?

If you’re VAT registered and your business closes, you’ll need to deregister from VAT as soon as possible. You can cancel your VAT registration online, and in some cases (for example, if you’ve made your business dormant), you’ll have 30 days to deregister.

You can also de-register for VAT if the business will continue to trade, but:

• Turnover is consistently below the £88,000 deregistration threshold
• The nature of your business changes and you no longer make VAT-taxable sales

 
Need help with submitting your final tax returns, or need to assistance changing your business structure? Whatever your tax query, get in touch on 020 3355 4047, or get an instant quote online.