Self-employed status with HMRC if off work for more than a year?

CoyKarp

I am a self-employed sole trader and have been for many years. Last year in October, mostly for health reasons, I started a sabbatical. At the time of posting, May 2026, I am still off work and living on savings.

If I remained off work and did not earn anything at all in the current 26-27 tax year, what would happen to my two self-employed businesses in the eyes of HMRC? Would they be automatically closed?

Would it be better that I did at least a small amount of work during this year, just to keep things straightforward?

Thanks for reading.

MyRealNameToo

As a self employed person there is only one legal entity, thats you. Whilst you can cease trading the only way it truly closes is on your passing. Companies are different, they have their own legal identity and so can be closed without the death of the shareholders/directors but its Companies House not HMRC that would do that.

Unless you inform HMRC that you have ceased trading the likelihood is that you just keep getting asked to do a self assessment and keep doing a nil return. In principle someone could spot it and raise questions but the probability is fairly low.

LITRG

Hi, you might find our guidance on stopping your business of interest: https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/self-employment-stopping-your-business.

Hope you find it helpful.

CoyKarp

https://forums.moneysavingexpert.com/discussion/comment/81983717#Comment_81983717

Hi, thanks for this but the link isn't working.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81984409#Comment_81984409

They inadvertently left an erroneous full stop at the end, so the correct link is https://www.litrg.org.uk/working/self-employment/calculating-self-employed-profits/self-employment-stopping-your-business

CoyKarp

https://forums.moneysavingexpert.com/discussion/comment/81984623#Comment_81984623

Thanks for this. I still can't find the answer to my query, and not in google either. The issue seems to be about whether to fill in a tax return or not. I have other income I would be declaring, so would not stop filing tax returns. But still I probably need to call HMRC to clarify on this. (I would have thought it was a relatively common issue, oddly, if someone goes on longer term sick or has to be a carer for a while.)

eskbanker

https://www.gov.uk/stop-being-self-employed is similar to the LITRG page in that it seems to be geared to permanently ceasing self-employment, so if you're just taking a break then my interpretation would be aligned with the earlier poster, i.e. you'd file nil returns rather than formally declaring that you're no longer self-employed.

I can't see how HMRC could "automatically close" businesses if that's your concern?

CoyKarp

https://forums.moneysavingexpert.com/discussion/comment/81985515#Comment_81985515

(I only just saw this comment.) I mean, yes, now you put it like that…🤔 I will seek a definitive answer.

uknick

As you are still doing SA, I'm not sure what definitive answer you're looking for, as @MyRealNameToo gave you it.

You keep on filling in the self employed section of the SA but with a nil balance. If HMRC query why this is (unlikely I'd think unless you were declaring £000s of tax to pay from your trade) then you get the chance to tell them.