You need to tell HM Revenue and Customs (HMRC) straight away if your business stops employing people.
Closing your PAYE scheme
You need to submit a final payroll return - either a Full Payment Submission (FPS) or Employer Payment Summary (EPS). You should:
- deduct and pay any outstanding tax and National Insurance to HMRC within 17 days (or 14 if you’re paying by cheque)
- select the ‘Final submission because scheme ceased’ box
- put the date you closed your PAYE scheme in the ‘Date scheme ceased’ box - you can’t put a date in the future
You also need to:
- send your expenses and benefits returns
- enter a leaving date on each employee’s payroll record
- give your employees a P45 on their last day - most payroll software can produce a P45 for you or you can order them from HMRC
If you start employing anyone in the same or next tax year, you should reopen your PAYE scheme by sending an FPS with your PAYE reference.
If you temporarily stop employing staff
Your PAYE scheme continues to run if you stop employing staff for less than a whole tax year (eg if you run a seasonal business). You don’t need to give your employees a P45 if you keep them on your payroll.
If you won’t pay staff for 3 months or more, put ‘Yes’ in the ‘Irregular payment pattern indicator’ on the last FPS before you stop paying them.
You should submit an EPS to tell HMRC if there are months when you don’t pay staff. For gaps in the current and last tax month, enter dates in the ‘No payments due’ fields. For gaps in the next 12 months, enter the relevant dates in the ‘Period of inactivity’ fields.
Mergers and successions
The rules are different if you stop employing staff because your business merges or changes ownership.