Stopping a business or letting: what GOV.UK says to do under MTD

Bronwen is fictional, but her position is one many sole traders reach at some point. For years she has run a small hair salon as a self-employed hairdresser, and she also lets out a flat. Together, the two have put her into Making Tax Digital (MTD) for Income Tax, so she keeps digital records and sends quarterly updates for both. She has now decided to close the salon, while keeping the flat. Her question is a practical one: what does she still owe HMRC for a business that has stopped, and what carries on? This guide sets out what GOV.UK says about that, so that someone in her position can see where the obligations end.

What GOV.UK counts as ceasing an income source

GOV.UK’s page on adding or ceasing income sources starts with a definition, and it helps to have it in mind before anything else. Ceasing a self-employment or property income source means that your business has stopped trading or you have stopped receiving income from properties.

That is different from income that simply falls. If your rent or profits drop but the business or letting carries on, nothing has ceased, and the rules about leaving MTD because your income is lower are a separate matter. For Bronwen, closing the salon is a ceasing, and the flat is a source that continues. What you need to do depends on whether you are ceasing all of your sources or a single source of self-employment or property income.

Selling one property when you still let others

It is easy to assume that selling a property ends an income source. GOV.UK treats your UK lettings as a single property business, so the answer depends on whether any lettings remain. If you stop renting out a UK property but still rent out other properties, then your property business is continuing, and you do not need to tell HMRC.

So selling one of several UK properties, while you keep letting the rest, is not a ceasing in GOV.UK’s sense. Bronwen lets only one flat, so if she ever sold it, her property income would stop altogether, and that would count as a ceasing. GOV.UK’s ceasing sections speak only of UK property here, so if you let property abroad as well, it is worth checking GOV.UK’s page directly rather than assuming the same applies.

Telling HMRC, and by when

When a source does stop, the first step is to let HMRC know. You can use your HMRC online services account, or your agent can use their agent services account, to tell HMRC when this happens by entering the date the business or property income ended. You sign in through HMRC online services, or an accountant acting for you can use their agent services account.

The timing matters, because the deadline is tied to the quarterly update calendar rather than to the day the business closed. You must tell HMRC by the quarterly update deadline for the period the business or property income stopped. The ceased source will then be included in your tax return. The MTD deadlines calendar shows which quarterly update deadline covers each period.

What is still owed when one source stops

This is Bronwen’s situation. The salon has stopped, but the flat has not, so she is ceasing a single source. If only one of your income sources ceases, you must tell HMRC using your HMRC online services account (or your agent uses their agent services account) and complete all outstanding quarterly updates for that source from when the income was active.

In other words, any updates the salon still owed for the time it was trading need to be sent, even though the business has now closed. Once the source has ceased, GOV.UK says you will:

• no longer receive quarterly update reminders for that source, if you have opted to receive digital communication
• still receive a reminder to submit your tax return for the year

The flat is unaffected by the salon closing, which is easy to forget in the middle of winding a business down. You must continue creating digital records and sending quarterly updates for any continuing sources of self-employment or property income.

GOV.UK gives an example that shows how this works in practice. If self-employment or property income ceased in May 2026, you must send the quarterly update due by 7 August 2026, but you will not need to send any further quarterly updates for that income. The income from the ceased source is then included in your 2026 to 2027 tax return.

What is still owed when everything stops

If Bronwen later sold the flat as well, or if your own salon or letting was your only source of self-employment or property income, the steps are a little different. GOV.UK sets them out in order: If you are ceasing all of your self-employment or property income sources, you must:

1. use your HMRC online services account (or your agent uses their agent services account) to tell HMRC the date the income source ceased
2. send the final quarterly update for the period that includes the date the income ceased
3. include the ceased income in your tax return, which you must still send for the tax year the income ceased, using Making Tax Digital for Income Tax software

The last step is easy to overlook. The tax return for the year the income ceased is still sent with your MTD software, so it makes sense to keep your software in place until that return has gone in.

What happens after that tax year

Once the tax year in which everything stopped is over, MTD itself no longer applies. After the tax year in which the income ceased, you will not need to use Making Tax Digital for Income Tax. You will still need to store your digital records to support your tax return. GOV.UK’s page links to its guidance on how long to keep your records, which is the place to check before you delete anything.

Where to go next

If your income has fallen rather than stopped, the guide to opting out of MTD explains what GOV.UK says about leaving when your income drops below the threshold. If you are starting something new instead, such as a fresh business after closing an old one, the guide to starting partway through the year covers how a new income source joins your updates. If HMRC signed you up and your income had already stopped, the guide for people HMRC has signed up explains what to update in your account. For the dates themselves, the MTD deadlines calendar lists every quarterly update and return deadline, and GOV.UK’s page on adding or ceasing income sources has the rules in full.

Questions people ask when a business or letting stops