Guide to Closing or Pausing Your Business

Life happens. Babies arrive, illness strikes, burnout hits, you decide to do something else, or you just need a break. Whatever the reason, there is a right way and a wrong way to step back from your beauty business.

The wrong way: ghosting your clients, ignoring HMRC, and hoping everything sorts itself out. The right way: reading this guide and following the steps.

Quick Rule of Thumb

Pausing is not closing. You do not need to deregister with HMRC for a break - just file a return showing no income for that period. If you are closing permanently, tell HMRC within 3 months of stopping, file your final Self Assessment, and cancel everything (insurance, ICO registration, subscriptions). Do not just walk away.

Tip for new starters: If you are taking a break in your first year (holiday, illness, personal reasons), do not panic about HMRC. You do not need to deregister. Just file your Self Assessment as normal at the end of the tax year showing zero income for the months you did not work. It is completely straightforward.

Maternity Leave

Having a baby is the most common reason beauty workers pause their business. Here is your checklist:

Before Your Leave

HMRC:

• You do NOT need to deregister as self-employed. You are pausing, not closing.
• Keep your Self Assessment registration active - you will come back.
• Make sure your Class 2 NI contributions are up to date (this affects your Maternity Allowance - see our dedicated guide).

Maternity Allowance:

• Claim from 26 weeks pregnant using form MA1
• Up to £184.03/week for 39 weeks (2025-26 rate)
• You need at least 13 weeks of Class 2 NI paid in the 66 weeks before your due date
• See our full Maternity Allowance guide for details

Your Insurer:

• Tell your insurer you are taking a break.
• Most insurers will pause your cover (saving you money) or switch to a reduced "run-off" cover.
• If you do any Keeping in Touch days (up to 10 allowed under Maternity Allowance), make sure your insurance is active for those days.
• When you return, reactivate your full cover before seeing any clients.

Your Clients:

• Tell your regular clients at least 4-6 weeks in advance.
• Recommend another professional they can see while you are away. This is good practice - they are more likely to come back to you if you help them, not abandon them.
• Set a rough return date: "I plan to be back around [month]." This gives them something to look forward to.
• Set out-of-office messages on your booking system, social media, and phone.

Your Chair Rental:

• Check your rental agreement. Can you pause? What notice is needed?
• Negotiate a rent reduction or pause period. Get it in writing.
• If you cannot pause, consider whether you can sub-let your chair to another professional (check your agreement allows this).

Your Bookings:

• Cancel or rebook any outstanding appointments well in advance.
• Refund any deposits for appointments you cannot fulfil.
• Close your online booking so new clients cannot book during your leave.

During Your Leave

• You can work up to 10 Keeping in Touch (KIT) days without affecting your Maternity Allowance.
• Consider using KIT days for essential business tasks (accounts, planning) rather than client appointments.
• Keep your social media ticking over if you can - occasional posts keep you visible. But do not feel obligated.
• File your Self Assessment as normal at the end of the tax year. You will just show reduced or zero income for the leave period.

Coming Back

• Reactivate your insurance before seeing anyone.
• Update your booking system and open your diary.
• Announce your return on social media.
• Consider a "welcome back" offer to re-engage clients.
• Ease back in - you do not need to go from zero to full diary in week one.

Illness

Illness is harder to plan for than maternity. Here is what you need to know.

Short-Term Illness (Days to Weeks)

• Cancel and rebook your appointments. Explain you are unwell (you do not need to give details).
• You have no entitlement to Statutory Sick Pay as a self-employed person.
• If you have income protection insurance, check your policy - there is usually a waiting period (called a "deferred period") of 4-8 weeks before payments start.
• Short-term illness is something you should have savings for. This is one reason having a financial cushion matters.

Longer-Term Illness (Weeks to Months)

If you are unable to work for an extended period:

Financial Support:

• Income Protection Insurance: If you have it, this is where it kicks in. Typically pays 50-70% of your income after the deferred period. If you do not have income protection, get it when you are well - it costs £20-50/month and could save your finances.
• Employment and Support Allowance (ESA): A government benefit for people who cannot work due to illness or disability. Two types:
  • Contributory ESA: based on your NI contributions. Currently up to £90.50/week (2025-26). You need to have paid enough NI in the 2-3 years before your claim.
  • Income-related ESA: means-tested, being replaced by Universal Credit for new claims.
• Universal Credit: You may be eligible for Universal Credit if your income drops significantly. The amount depends on your circumstances (savings, partner's income, housing costs, etc.). Apply at gov.uk/universal-credit.
• Personal Independence Payment (PIP): If your illness or disability affects your daily life or mobility, you may be eligible for PIP regardless of your income. It is not means-tested. Apply at gov.uk/pip.

Your Business:

• Tell HMRC you are temporarily not trading (but do not deregister unless you are closing permanently).
• Tell your insurer. Pause your cover to save money.
• Tell your clients. Be honest about the situation (as much as you are comfortable sharing). Recommend alternatives.
• If you rent a chair, talk to the salon owner about pausing or reducing rent. Most reasonable salon owners will accommodate illness.
• Close your online booking.
• Cancel any subscriptions you do not need while not working (booking software, marketing tools).

Seasonal Break

If you take a planned break (Christmas, summer holidays, or any other period):

• You do NOT need to deregister with HMRC. A seasonal break is normal business activity.
• File your Self Assessment as usual. Your return will show the income you earned during the months you worked. If you earned nothing in August because you were on holiday, that is fine - you just show zero income for that period.
• Tell your clients well in advance and reopen bookings before you return.
• Keep paying fixed costs (insurance, ICO registration, chair rent if applicable) unless you can negotiate a pause.
• Consider your Class 2 NI. Even if you do not trade for a few weeks, your NI contributions continue if you are registered. This is fine - it protects your State Pension and benefit entitlements.

Closing Permanently

If you are stopping your beauty business for good, here is everything you need to do:

Step 1: Tell HMRC (Within 3 Months)

You must tell HMRC you have stopped self-employment within 3 months of your last day of trading.

How: Go to gov.uk and search for "stop being self-employed." You can do it online through your Government Gateway account or by calling HMRC on 0300 200 3310.

What happens: HMRC will note the date you stopped trading. They will still expect your final Self Assessment tax return.

Step 2: File Your Final Self Assessment

You must file a Self Assessment tax return for your final year of trading, even if you only traded for part of the year.

Deadline: 31 January following the end of the tax year in which you stopped. For example, if you stop trading in September 2026 (tax year 2026-27), your final return is due by 31 January 2028.

What to include:

• All income from the start of the tax year to your last day of trading
• All allowable expenses for the same period
• Any capital allowances on equipment you are disposing of
• Any balancing charges (if you sell equipment for more than its written-down value)

Step 3: Pay Any Outstanding Tax

Once your final return is filed, pay any tax owed. HMRC will confirm how much you owe. Pay on time to avoid interest and penalties.

If you have been making payments on account, HMRC may owe YOU money. They will refund any overpayment.

Step 4: Cancel Your ICO Registration

If you are registered with the ICO (which you should be if you process personal data), cancel your registration. You can do this online at ico.org.uk.

But note: You still need to retain client records for the required periods (7 years for treatment records, 5 years for financial records) even after you stop trading. GDPR obligations continue for as long as you hold personal data. You do not need to stay registered with the ICO if you are no longer actively processing data (just storing existing records securely), but check the ICO's guidance to be sure.

Step 5: Cancel Your Insurance

Tell your insurer you are closing. Ask about:

• Run-off cover. This covers you for claims made after you stop trading but relating to treatments you performed while insured. Some policies include a period of run-off cover automatically. If not, consider purchasing it - a client could complain about a treatment months or years later.
• Final premium. You may be entitled to a partial refund if you have paid annually and are stopping mid-year.

Step 6: Cancel Subscriptions and Contracts

Go through everything and cancel:

• Booking software subscription
• Marketing tools (Mailchimp, etc.)
• Product subscriptions or standing orders
• Trade body membership (BABTAC, NHBF) - or switch to a lower tier
• Premises lease (follow the terms - you cannot just walk away from a commercial lease)
• Equipment finance agreements (these continue until paid off regardless of whether you trade)

Step 7: Handle Client Data

• Do NOT delete all client records immediately. You need to keep them for the retention periods (treatment records: 7 years, financial records: 5 years).
• Store them securely (locked cabinet or encrypted digital storage).
• If clients ask for their data, you still need to comply with subject access requests under UK GDPR.
• After the retention period expires, destroy the records securely (shred paper, properly delete digital files).

Step 8: Tell Your Clients

• Tell your regular clients you are closing. Give them as much notice as possible.
• Recommend other professionals they can see.
• If they have pre-paid treatments, gift vouchers, or deposits - honour them or refund them. Do not just keep the money. Consumer Rights Act applies.
• Update your social media and booking page to reflect that you are closed.

Step 9: Settle Outstanding Debts

• Pay all outstanding supplier invoices
• Return any products on sale-or-return terms
• Refund any client deposits for future appointments
• Pay any outstanding rent or lease obligations

Selling Your Business

If your business has value - an established client list, a strong social media following, a recognisable brand, goodwill in your community - you may be able to sell it rather than simply closing.

What has value:

How to sell:

1. Value your business. A simple approach: add up your assets (equipment, stock) plus a multiple of your annual profit (typically 1-2x for a sole trader beauty business). Get professional advice for a more accurate valuation.
2. Find a buyer. This could be another beauty worker looking to go from mobile to premises, someone entering the industry, or an existing salon wanting to expand. Word of mouth, industry forums, and business brokers can help.
3. Use a solicitor. Even a simple sale should have a written agreement covering what is being sold, the price, payment terms, handover arrangements, and any restrictions (e.g., a non-compete clause stopping you from setting up next door).
4. Introduce clients. The client list is only valuable if clients stay. Introduce the new owner personally to your key clients if possible.
5. Transfer accounts. Help the new owner take over your booking system, social media accounts (if included in the sale), and supplier relationships.

Tax on selling your business:

• Proceeds from selling business assets may be subject to Capital Gains Tax
• Business Asset Disposal Relief (formerly Entrepreneurs' Relief) may apply, reducing the CGT rate to 10% on qualifying gains up to £1 million
• Get advice from an accountant before completing the sale

Do Not Just Walk Away

The worst thing you can do is simply stop - stop seeing clients, stop filing tax returns, stop paying insurance, stop responding to messages. This leaves you exposed to:

• HMRC penalties for late or missing tax returns (£100 per return, escalating)
• HMRC investigations into undeclared income
• Insurance claims with no cover (if a past client complains)
• ICO penalties for failing to pay the data protection fee
• Angry clients with no explanation and no alternative

Closing or pausing a business properly takes a few hours. Dealing with the fallout from doing it badly can take months and cost thousands.

What To Do Next

1. Decide: are you pausing or closing? They require different actions.
2. If pausing: Tell HMRC (but do not deregister), tell your insurer, tell your clients. Close your booking system. File your tax return as normal.
3. If closing: Follow the 9-step checklist above. Start with telling HMRC and work through the list.
4. Check your finances. Do you have outstanding tax, unpaid suppliers, or unfulfilled client commitments? Sort them before you stop.
5. Keep your records. Even after you stop trading, you need to keep treatment records for 7 years and financial records for 5 years.

Tip for new starters: Even if you are only pausing for a few weeks, close your online booking so new clients cannot book appointments you will not be there for. Reopening takes 30 seconds. Dealing with a frustrated new client who booked and got no response takes much longer.

Who To Contact

• HMRC Self Assessment - 0300 200 3310 (Free) - stopping self-employment, tax queries - gov.uk
• DWP - gov.uk/universal-credit (Free) - benefits queries
• Citizens Advice - 0800 144 8848 (Free) - citizensadvice.org.uk - benefits, debt, and general guidance
• MoneyHelper - 0800 138 7777 (Free) - budgeting and debt guidance
• Maternity Allowance claims - 0800 055 6688 (Free)
• Your insurer - run-off cover and cancellation
• ICO - 0303 123 1113 (Free) - ico.org.uk - cancelling data protection registration
• Maternity Action - maternityaction.org.uk (Free) - maternity rights
• NHBF - nhbf.co.uk - business closure guidance (Paid, members only)
• Gov.uk - gov.uk/stop-being-self-employed (Free) - step-by-step guide

Sources

• HMRC guidance on stopping self-employment
• HMRC Self Assessment guidance
• Gov.uk Universal Credit and ESA eligibility
• Social Security Contributions and Benefits Act 1992 (Maternity Allowance)
• ICO guidance on data retention after business closure
• UK GDPR and Data Protection Act 2018
• Consumer Rights Act 2015 (pre-paid services and refunds)
• Taxation of Chargeable Gains Act 1992 (Capital Gains Tax on business disposals)

Related Guides

• Maternity Allowance for Self-Employed Beauty Workers
• Self-Assessment for Hairdressers
• Insurance for Chair Renters
• GDPR for Self-Employed Beauty Workers
• Client Record-Keeping: What You Must Store

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