In this section:
PAYE if your business closes or changes
There are a number of potential changes to your business that have implications for your operation of PAYE (Pay As You Earn). This guide sets out what you must do in some of the most important of these circumstances, such as ceasing to employ anyone, closing your business, or selling the business on to someone else.
On this page:
- PAYE if your business closes down
- If you no longer employ anyone and don't plan to do so again
- If you have stopped employing anyone but plan this to be temporary
- What to do if your business and its payroll changes hands
- Other changes to your business that have PAYE implications
- More useful links
PAYE if your business closes down
If you close down your business you must inform us so that we can update your employer record. You must also pay us any PAYE tax and National Insurance contributions (NICs) you owe within 14 days (17 days if you pay by electronic means) of the last tax month (or quarter if you pay quarterly) in which your business was still open.
You will also have to complete your end-of-year returns up to the date on which your business closes. To avoid any delays with finalising your affairs, we recommend that you do this as soon as possible. The returns you must send us are:
- your annual return (form P35 and forms P14)
- your expenses and benefits returns (forms P11D, P11D(b) and P9D)
Remember that if you have 50 or more employees you must file your annual return online. If you have fewer than 50 employees, you do not have to file online before at least 2010 but you can get tax-free payments for filing online before then.
If you are entitled to one of these tax-free payments, it will help us to process it swiftly if you send us your return as soon as possible. This is particularly important if you need the payment to be made before your business bank accounts are closed.
(Note that if you close down a limited company, we are not permitted to make these tax-free payments once the business has been removed from the register of companies kept by Companies House.)
More about completing your PAYE employer annual return
Read about how to make expenses and benefits returns
More about PAYE online filing, including deadlines and tax-free payments
If you no longer employ anyone and don't plan to do so again
If your business no longer employs anyone then you should contact us. In many instances we will close down your PAYE scheme. However, if your business is a limited company, we will ask you for additional information before deciding how to proceed.
You must pay us any PAYE tax and NICs that you owe within 14 days (17 days if you pay by electronic means) of the last tax month (or quarter if you pay quarterly) in which you still had employees. And you must also file your end-of-tax-year forms, as outlined in the section above.
If you have stopped employing anyone but plan this to be temporary
If you face a temporary gap in which you will owe us no PAYE tax or NICs, then the steps you must take depend on the length of the gap.
There are numerous possible reasons for this kind of gap in PAYE liabilities - for example, seasonal businesses often employ no-one during the quiet months of the year.
Gaps of less than a year
If you expect that your gap in liabilities will be for less than a whole tax year, then your PAYE scheme will continue to operate. However, because we expect regular payments from every operational PAYE scheme, you will have to inform us every time there is a payment period (month or quarter) for which you have no PAYE tax or NICs to pay to us.
You do this by making a 'nil declaration' in any of the following ways:
- The quickest way is to make your nil declaration online - there's a link at the end of this section.
- To make the declaration by phone, you will need to tell us your Accounts Office reference number and the month or quarter for which no payment is due. Contact us on Tel 0845 366 7816 - this is open from 8.00 am to 8.00 pm, Monday to Friday and 8.00 am to 4.00 pm on Saturdays.
- You can mark 'NIL DUE' on a PAYE payslip for the month or quarter - you should then sign this and send it to us.
Make a PAYE nil declaration online
Gaps of a year or longer
If you don't intend to employ anyone for at least one whole tax year, you must contact us. We will let you know whether or not we need to close down your PAYE scheme, or to mark it as dormant for the duration of the gap. You do not need to send us nil payment declarations if we either close your scheme down or mark it dormant. When you start to employ someone again, you must let us know straight away.
What to do if your business and its payroll changes hands
If your business is bought or otherwise transferred to a new owner, or if you take over another business there are steps you'll need to take to ensure that PAYE continues to operate correctly for the affected employees.
If you take over another business
If you take over another employer's business, then you also take on the responsibility for its employees and its payroll. You must take all of the following actions that apply to you:
- Work out and deduct PAYE tax and Class 1 NICs from any payments you make to the transferred employees from the date you became their employer.
- Pay us any PAYE tax and Class 1 NICs you deduct within 14 days of the end of the tax month or quarter (17 days if you pay electronically).
- Record and pay any Class 1A NICs due on benefits in kind you give to transferred employees (these are due to us by 19 July after the end of tax year, or by 22 July if you pay electronically).
- Pay any Class 1B NICs due under a PAYE Settlement that's been agreed for the tax year. Note that it doesn't matter if you took over part way through the tax year, you must still pay the Class 1B NICs - the deadline is 19 October after the end of the tax year.
You must also include your new employees in your annual return (form P35 and form P14s) and in your expenses and benefits returns on forms P9D, P11D and P11D(b).
More about completing your Employer Annual Return
Read about how to make expenses and benefits returns
If your business is taken over
If your business and its employees are taken over by another employer, you must inform us of the change. You also need to make sure that you work out, record and deduct the correct PAYE tax and NICs for the period up until your business changes hands. You must:
- Work out the PAYE tax and Class 1 NICs owed on all your employee payments up until the takeover.
- Pay us the PAYE tax and Class 1 NICs you owe within 14 days of the end of tax month or quarter in which the change of ownership occurred (you have 17 days if you pay electronically).
- Record on forms P9D or P11D any Class 1A NICs due on benefits you provided to employees now transferring to the new employer - their new employer will complete and submit the return later.
- Record and pay us any Class 1A NICs due on benefits you gave to employees who left your business before the takeover. The deadline for payment is 19 July after the end of the tax year (22 July if you pay electronically).
Read about how to make expenses and benefits returns
Other changes to your business that have PAYE implications
The sections above focus on a small number of major changes that may involve a temporary or permanent end to your PAYE tax and NICs payments to us.
Of course, there are many other potential changes to your business that will have PAYE implications - such as taking on a new employee or paying Statutory Maternity Pay. You'll find guidance on these and many other topics elsewhere on this site - use the links below.
If there is a business change that you can't see dealt with on our website, you can contact our Employer Helpline for advice - Tel 08457 143 143. We also have a New Employer Helpline which specialises in advising employers with less than three years' experience - Tel 0845 607 0143. (Both helplines are open 8.00 am to 8.00 pm, Monday to Friday and 8.00 am to 5.00 pm on Saturday and Sunday.)
More useful links
PAYE when an employee leaves or retires
PAYE when an employee's circumstances changes
Dealing with expenses and benefits
Statutory maternity, paternity, adoption and sick pay
