Is There a P45 for the Self-Employed in 2026/27? | UK Tax Guide

The short answer is no. A self-employed individual (sole trader) does not receive or generate a P45 when they cease trading. The UK tax system designs the P45 exclusively for individuals operating within the Pay As You Earn (PAYE) employment system.

If you or your client are transitioning out of self-employment during the 2026/27 tax year, you must follow specific digital notification procedures rather than relying on standard payroll forms. Here is an exhaustive breakdown of the legal framework, how to report the cessation of a business to HMRC, and how to transition into a new employment role.

The Legal Status of a P45

A P45 is a statutory document governed by the Income Tax (Pay As You Earn) Regulations 2003. Its legal purpose is to transfer a taxpayer’s current-year payroll information (tax code, total pay, and total tax deducted) from an old employer to a new employer.

Under Regulation 36 of the PAYE Regulations 2003, the obligation to produce a P45 falls explicitly on an employer:

“36(1) On ceasing to employ an employee in respect of whom a code has been issued, the employer must complete Form P45.”

Because a self-employed sole trader does not have an “employer” in the statutory sense, the PAYE regulations do not apply to their trading income.  Consequently, you cannot issue yourself a P45 when you close your business.

How to Report the End of Self-Employment in 2026/27

Instead of issuing a P45, self-employed individuals must formally notify HMRC that their business has ceased. For the 2026/27 tax year, the method of notification depends entirely on whether your income breaches the new Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) thresholds.

MTD for ITSA Rules (Income over £50,000)

From 6 April 2026, MTD for ITSA becomes mandatory for sole traders and landlords who have a qualifying annual income exceeding £50,000.  If you fall into this mandated category, you face strict real-time reporting obligations when closing your business.

You must log into your HMRC online services account (or your accountant must use their agent services account) to register the exact date the income source ceased.

Crucially, you must notify HMRC by the quarterly update deadline for the period in which the business stopped.  For the 2026/27 tax year, the mandated quarterly MTD deadlines are:

• 7 August 2026
• 7 November 2026
• 7 February 2027
• 7 May 2027

For example, if your self-employment ceases in May 2026, you must submit your final MTD quarterly update for that specific source of income by the 7 August 2026 deadline.  Following this, you will no longer receive quarterly update reminders for that ceased income stream, but you must still include the final trading figures in your end-of-year tax return using your MTD-compatible software.

Standard Self Assessment (Income under £50,000)

If your trading and property income remains below the £50,000 MTD threshold for the 2026/27 tax year, you operate under the traditional Self Assessment rules. You must inform HMRC via your online personal tax account or by contacting the Self Assessment helpline that you have stopped trading, and you will report your final apportioned profits on your standard annual tax return.

Starting a New Job Without a P45

When a formerly self-employed person secures a PAYE job, the new employer still needs to calculate their tax deductions. Without a P45, the standard PAYE onboarding procedure shifts to the Starter Checklist.

The Starter Checklist

HMRC provides the Starter Checklist (which replaced the old P46 form) specifically for new starters who cannot produce a recent P45.  The employer must issue this checklist so they can gather the necessary information to run their payroll correctly.

On the Starter Checklist, the former sole trader selects a declaration statement that accurately reflects their current situation:

• Statement A: This is their first job since the start of the tax year (6 April), and they have not received taxable Jobseeker’s Allowance or Employment and Support Allowance. (This often applies if the individual has solely been self-employed and had no concurrent PAYE roles).
• Statement B: This is now their only job, but since 6 April they have had another job or received taxable benefits.
• Statement C: They have another job or receive a State, workplace, or private pension.

The declaration chosen directly determines the initial tax code the employer applies.  For example, if Statement C is selected because the individual is keeping their self-employment active alongside the new job, the employer will typically allocate a BR (Basic Rate) tax code.  If the worker fails to return the Starter Checklist altogether, the employer must apply an emergency 0T code on a non-cumulative Week 1/Month 1 basis until HMRC issues a formal coding notice.

Summary Table: Cessation and Onboarding in 2026/27

For completeness, if your client ceases trading during the 2026/27 tax year, ensure you also review their VAT registration status. If their trading entity is VAT registered, they must separately notify HMRC to deregister for VAT within 30 days of ceasing to make taxable supplies, accounting for any VAT due on closing stock or assets on their final return.