When a self employment or property business stops under Making Tax Digital for Income Tax, you tell HMRC the date it ceased through your online account (or your agent’s agent services account) by the quarterly update deadline for the period in which it stopped. That period ends on the cessation date, you send a final quarterly update for it, and no later updates are due for that business. You still file the tax return for that year through MTD software, and if all your MTD income has stopped you leave the regime after that tax year.
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What counts as ceasing a business for MTD?
HMRC’s guidance describes ceasing as your business having stopped trading or you having stopped receiving income from property. The legal anchor is regulation 6 of the Income Tax (Digital Obligations) Regulations 2026 (SI 2026/336), which makes the date you cease to carry on the activity the “digital termination date”.
Three points catch people out:
- Property is one business. All your UK lettings form one UK property business, and overseas lettings form one foreign property business. Selling one rental while keeping others is not a cessation, and HMRC says you do not need to tell it.
- Residence changes count. Regulation 6(3) treats a cessation as including one deemed under section 17(2)(a) of ITTOIA 2005 when you become or cease to be UK resident, and treats a foreign property business as ceasing when you stop being UK resident.
- Winding down is not ceasing. Whether a trade has actually stopped is a question of fact; see stopping self employment: tax steps.
What must you tell HMRC, and by when?
Regulation 6(1)(b) requires you to notify HMRC of the digital termination date no later than the quarterly update deadline for the period in which that date falls. HMRC’s guidance says you do this by entering the date the business or property income ended in your HMRC online services account, or your agent does it through the agent services account. Regulation 6(2) switches off the duty where no digital obligation applies to you on that date, for example because you are exempt.
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How does the final quarterly period work?
Normally each update period runs from the start of the tax year to 5 July, 5 October, 5 January or 5 April (or the calendar quarter ends if you use the calendar quarters election). Regulation 14 cuts this short: the period containing the digital termination date ends on that date. Regulation 9(3) then removes the need for any update for a later period for that business. The deadline for the final update stays the normal deadline for that period.
HMRC’s own example is a business that ceases in May 2026: the update due by 7 August 2026 must be sent, and no further updates are needed for that income. Using standard periods, the pattern looks like this:
| Date business ceases | Final update covers | Final update and notification due |
|---|---|---|
| 20 May 2026 | 6 April 2026 to 20 May 2026 | 7 August 2026 |
| 15 November 2026 | 6 April 2026 to 15 November 2026 | 7 February 2027 |
| 10 March 2027 | 6 April 2026 to 10 March 2027 | 7 May 2027 |
Updates are cumulative, so the final one shows the whole of the tax year up to cessation, and any earlier updates for the year must also have been sent. For background on period dates see MTD quarterly periods.
What if only one of several businesses stops?
HMRC says that if only one income source ceases you must tell it, complete all outstanding quarterly updates for that source, and carry on creating digital records and sending updates for your continuing businesses. You will stop getting update reminders for the ceased source but will still be reminded to file the return. The ceased income goes into that year’s tax return alongside everything else.
What still has to be done after the final update?
The tax return for the year of cessation is still an MTD return. HMRC’s guidance says you must include the ceased income and send the return for that tax year using MTD software. Regulation 17(3) also sets the deadline for correcting the final period’s update: errors must be put right no later than the date the return is due.
The return is where the cessation tax work happens: year end adjustments, final capital allowances and any closing stock valuation. See capital allowances when a business ceases and post cessation receipts and expenses.
Keep the records. HMRC says you must still store your digital records to support the return, and its guidance on changing software says digital records must be kept for at least 5 years from the submission deadline for each tax year. For a 2026 to 2027 return due by 31 January 2028, that means until at least 31 January 2033.
When do you leave MTD?
Under regulation 7, your digital obligation tax years for a business end with the tax year in which its digital termination date falls. HMRC’s guidance puts it simply: if you cease all your self employment and property income, after the tax year in which the income ceased you will not need to use MTD for Income Tax.
Leaving MTD does not end the tax cycle. The balancing payment for the final year is due by 31 January after it ends, and payments on account for the following year may still be demanded because they are based on the final year’s bill. Section 59A(3) of the Taxes Management Act 1970 lets you claim that no payments on account are needed if you believe your tax will be covered by tax deducted at source, or (under section 59A(4)) reduce them. See payments on account under MTD.
What about insolvency or death?
HMRC’s guidance says that if you continue to receive self employment or property income after entering a formal insolvency procedure, you keep using MTD; if you do not, you follow the cessation steps above. If you have late submission penalty points when you become insolvent, HMRC resets them to zero.
On death, HMRC says the person’s MTD obligations stop. The personal representative must tell HMRC and make sure outstanding returns are completed, but does not need to create digital records, send outstanding quarterly updates or submit returns using MTD software.
How does this look for a landlord?
Illustration only. A landlord with two UK flats on standard periods sells the first in August 2026. That is not a cessation, so nothing is notified. He sells the second on 15 November 2026 and stops letting. His property business ceases on that date. By 7 February 2027 he enters the cessation date in his online account and sends an update covering 6 April to 15 November 2026. No update is due for the period to 5 April 2027. He submits his 2026 to 2027 return through MTD software by 31 January 2028, including any capital gains on the sales. From 6 April 2027 he has no MTD obligations unless he starts a new business and is brought back in under the normal entry rules.
What mistakes come up?
- Telling HMRC the business has stopped but not sending the final update for the shortened period.
- Sending a further update after cessation, or continuing to send nil updates for a ceased source.
- Treating the sale of one rental property as ceasing the property business.
- Filing the final year’s return outside MTD software.
- Forgetting that payments on account for the next year may still be due unless a claim is made.
- Discarding the old software and losing access to digital records that must be kept for 5 years after the filing deadline.
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Related Accountapedia entries
- Stopping self employment: tax steps
- MTD for Income Tax for rental income
- MTD Income Tax for partnerships
- MTD for Income Tax with overseas property income
- Payments on account under MTD for Income Tax
Sources
- GOV.UK: Add or cease income sources
- legislation.gov.uk: SI 2026/336
- GOV.UK: If your circumstances change
- GOV.UK: Help and support
- legislation.gov.uk: Act 1970 c. 9, section 59A
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.