Mr Farage was under investigation by the Parliamentary Commissioner for Standards over financial matters.
How an MP "resigns" is described in this previous post - Law and Lawyers: MP appointed to the "Chiltern Hundreds" - (Stoke, Desborough and Burnham).
What happens to the investigation is covered by the "Procedural Protocol"
Procedural Protocol in respect of the Code of Conduct
Code of Conduct for MPs:
By-election writs:
The House of Commons is in control of when writs to hold by-elections are issued - By-election timetables - House of Commons Library
Powers of Parliament:
Suspension - Erskine May - UK Parliament
Expulsion - Erskine May - UK Parliament
Recall of MPs - Erskine May - UK Parliament
Media:
Nigel Farage's political rivals rule out standing in Clacton by-election - BBC News
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