There’s lots of information out there on how to register for things like your Self Assessment, Corporation Tax, and VAT – but what happens if you want to deregister?
This could be for a number of reasons; you could decide to go into employment where your taxes are taken care of by your employer, or you might sell your company and no longer need to pay Corporation Tax. In some cases, your business might continue trading, but 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.
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.
The first thing you need to do is contact HMRC to let them know you believe you no longer need to submit a tax return. If HMRC agrees with you, you’ll receive a letter in the post confirming this.
Before you contact HMRC, you’ll need to have your National Insurance number and UTR number to hand.
If the reason you’re deregistering is that you’ll earn £1,000 or less, 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 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.
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 £83,000 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.
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A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people! Learn more about Rachael.