Managing Self Assessment Tax When Pausing or Restarting Your Sole Trader Business in the UK

If you run a sole trader business in the UK and decide to pause or restart trading, it is important to understand how this affects your Self Assessment tax obligations with HM Revenue and Customs (HMRC).

Pausing Your Sole Trader Business

If you temporarily stop trading, you still need to report any income you receive during that tax year. Even if your business is paused, you remain responsible for submitting a Self Assessment tax return if HMRC has asked you to do so or if you have other income to declare.

It is advisable to keep clear records of any business income or expenses incurred up to the point you pause trading. This helps you complete your tax return accurately. If you cease trading completely, you should notify HMRC by registering the cessation date in your Self Assessment account or by contacting them directly.

Restarting Your Sole Trader Business

If you restart your business after a pause and previously notified HMRC of cessation, you must inform HMRC about the restart. This ensures your Self Assessment record reflects your current trading status. You will continue to submit tax returns covering the periods when you were trading.

Each tax return covers income and expenses for the tax year ending on 5 April, regardless of whether you traded for the whole year or just part of it. Keep detailed records from the date you restart trading to make completing your return straightforward.

Registering for Self Assessment

If you have not already registered for Self Assessment and you start or restart trading, you must register with HMRC by 5 October following the end of the tax year in which you began trading. For example, if you restarted your business in the 2024/25 tax year, you should register by 5 October 2025.

If you fail to register on time, you may face fines. Registration can be done online, and once registered, you will receive a Unique Taxpayer Reference (UTR) which you need to file your tax returns.

Filing Your Tax Return

You must file your Self Assessment tax return after the end of the tax year (after 5 April). Whether you paused or restarted your business, your return should include all income and allowable expenses from the periods you traded.

HMRC calculates your tax bill based on the information you provide. You must pay any tax due by 31 January following the end of the tax year. If you miss deadlines for filing or payment, you could incur penalties and interest.

Record Keeping

Keep thorough records of your business income and expenses throughout the year, including during any pause or restart period. Records can include receipts, invoices, bank statements, and contracts. These support the figures you report on your tax return and help if HMRC requests evidence.

Summary

• Notify HMRC if you pause or cease trading, and again if you restart.
• Register for Self Assessment by 5 October after the tax year you start or restart trading.
• Submit a tax return covering all income and expenses for the tax year, including periods of pause or restart.
• Keep accurate records throughout to complete your tax return correctly.
• Pay any tax due by 31 January following the end of the tax year.

For specific queries about your situation, including how to notify HMRC about pausing or restarting, check official HMRC guidance or contact them directly.

Official reference: https://www.gov.uk/self-assessment-tax-returns. Always check the latest official guidance. Related forms: Browse our form category.

Important: This article provides general information. Government rules, forms and procedures can change, and this article may not reflect the latest updates. Check current GOV.UK guidance or the relevant authority before relying on it. ITG & Co. is independent and is not affiliated with a government department.