MTD for Income Tax: Ceased Trading/Ceased Income Sources

HMRC have updated the process for customers who have ceased all self-employment and property income since the end of the 2024–25 tax year. Customers can now contact HMRC directly, and their MTD obligations will be updated immediately.

HMRC have now improved the journey for customers who have ceased all self‑employment and property income since the end of the 2024–25 tax year.

• Customers who contact HMRC to tell them they have ceased income, will now have their records updated at the point of contact.
• Advisers have clear guidance to capture the necessary information via webchat or phone and will confirm that the customers no longer need to use MTD for Income Tax.
• Advisers will update the customer’s record to reflect the cessation, and customers will receive written confirmation that they no longer need to use MTD for Income Tax.

How this works

Customers who have ceased all self‑employment and property income since the end of 2024–25

• Customers will need to contact HMRC to tell them about the cessation, as this will not have been included on their last tax return.
• An adviser will take the details, update their obligations and confirm they are no longer required to use Making Tax Digital for Income Tax.
• The customer will still need to submit a 2025–26 Self-Assessment tax return, which will confirm the cessation.

Customers who have ceased one source of income but continue to receive income from another source

• Customers will still need to start using Making Tax Digital for Income Tax from 6 April 2026.
• After signing up, they will be able to enter the end date of the ceased business using HMRC online service.
• The cessation will also be confirmed when they submit their 2025–26 Self-Assessment tax return.

HMRC have updated GOV.UK guidance on cessation to reflect this: Work out your qualifying income for Making Tax Digital for Income Tax - GOV.UK

HMRC have also recently updated their MTD manual to explain what customers need to do if their income source ceases, after they start to use MTD:  Use Making Tax Digital for Income Tax - If your circumstances change - Guidance - GOV.UK

MTD Guidance: Use Making Tax Digital for Income Tax - Guidance - GOV.UK