Sorry, I meant to include how to do it then forgot..

To send the buyer a mutual cancellation, open up the dropdown menu next to the item in your eBay and select 'Resolve A Problem'. On the next screen, make sure 'I sold an item and want to cancel the transaction' is ticked, then click continue (you can select the reason for cancelling the transaction on the next page). 

The buyer will receive the request in their messages and to their registered email address.