Post-Cessation Expenses: Claiming Tax Relief After You Stop Trading (2026/27)

What Counts as a Post-Cessation Expense

Closing a self-employed business doesn't always mean every cost and every piece of income stops on the exact date trading ends. Post-cessation expenses cover costs that genuinely relate to the trade but are only paid after it has ceased — a common example is correcting or making good defective work carried out while the business was operating, professional fees incurred specifically to wind up the business's affairs, or a bad debt from a former client that only becomes clearly unrecoverable some time after the business closed.

How Relief Works

Where a payment qualifies as a genuine post-cessation expense — meaning it relates directly to the cessation of the trade and would have been an allowable business expense had trading continued — HMRC generally allows relief against your other income in the tax year the expense is actually paid, rather than the cost simply being lost because the business no longer exists. This matters because without this specific relief, a legitimate business cost paid after closure could otherwise fall into a gap with no tax relief available at all.

Time Limits Matter

Claims for post-cessation expense relief are subject to a time limit measured from the end of the tax year in which the expense was paid, so it's a mistake to assume the relief stays available indefinitely after a business winds down. If you're dealing with a lingering issue from a closed business — a client dispute, an unresolved bad debt, ongoing professional fees to finalise matters — it's worth checking the current time limit against HMRC guidance promptly, rather than letting the claim window lapse.

Post-Cessation Receipts: The Other Side

Income can also arrive after a business has stopped trading — a late-paying client settling an invoice, for instance. These post-cessation receipts remain taxable, with rules governing how and when they're brought into your tax position that broadly mirror the expense-side rules. It's a reminder that closing a business isn't always a single clean cut-off for tax purposes; loose ends on both income and expenses can follow the trade's official end date.

Checklist

• Identify any costs relating to your closed business that are only being paid now
• Check whether the expense would have qualified for relief had the business still been trading
• Claim within the applicable time limit from the end of the tax year the expense was paid
• Remember post-cessation receipts (late income) remain taxable under mirrored rules

This article is general information, not financial or tax advice. Check current HMRC guidance for the specific time limits and conditions that apply to post-cessation expenses and receipts.