One for Eric Mc
Discussion
First of all you are not a company - you are a sole trader. Therefore it is "you" personally who is trading. Therefore, any profits generated by you on any trading activities will be taxed on you personally.
The question you are really asking is - is this "new" activity so different from what I normally do that I need to prepare a separate set of trading accounts for this new business and not incorprate it into my already existing sole trader activities?
Well, the simple answer is yes you should keep it separate. If it is a "one off" you could prepare a "one off" set of trading accounts showing the Income and Expenditure on this one set of transactions. You will also need to complete TWO sets of Self Employed pages on the relevant Self Assessment tax return. If it is a genuinely "one off" trade, you would need to make this clear on the tax return and show the commencement and cessatuion dates on the return. If it is a genuine new ongoing trade, you will just have to continue to prepare separate accounts while it continues to trade.
Don't forget the VAT implications - on the assumption that you are VAT registererd, it is you personally who is registered (not your original business). That means that you will need to raise bona fide VAT invoices for this "new" trading activity and incorporate combined Outputs and Inputs on the relevant VAT returns.
Obviously, if you could convince yourself that the new activity does fit into your pre-existing tradethat would cancel the need to prepare separate figures.
In most circumstances showing two trades separately has no real impact on your tax - as long as both businesses make profits. Problems arise when one of them makes a loss. Trading losses can be offset against "other income" in the same tax year but can only be carried forward to future years against future profits FROM THE SAME TRADE.
There COULD be the option to treat this "one off" activity as a Capital Gains transaction - but only if it is a "one off" and has a "Capital" element to it. If that is the case, you could trigger the additional Capital Gains Tax allowance of over £8,000 which oterwise goes to waste each year.
Just a thought.
>> Edited by Eric Mc on Friday 10th September 08:29
The question you are really asking is - is this "new" activity so different from what I normally do that I need to prepare a separate set of trading accounts for this new business and not incorprate it into my already existing sole trader activities?
Well, the simple answer is yes you should keep it separate. If it is a "one off" you could prepare a "one off" set of trading accounts showing the Income and Expenditure on this one set of transactions. You will also need to complete TWO sets of Self Employed pages on the relevant Self Assessment tax return. If it is a genuinely "one off" trade, you would need to make this clear on the tax return and show the commencement and cessatuion dates on the return. If it is a genuine new ongoing trade, you will just have to continue to prepare separate accounts while it continues to trade.
Don't forget the VAT implications - on the assumption that you are VAT registererd, it is you personally who is registered (not your original business). That means that you will need to raise bona fide VAT invoices for this "new" trading activity and incorporate combined Outputs and Inputs on the relevant VAT returns.
Obviously, if you could convince yourself that the new activity does fit into your pre-existing tradethat would cancel the need to prepare separate figures.
In most circumstances showing two trades separately has no real impact on your tax - as long as both businesses make profits. Problems arise when one of them makes a loss. Trading losses can be offset against "other income" in the same tax year but can only be carried forward to future years against future profits FROM THE SAME TRADE.
There COULD be the option to treat this "one off" activity as a Capital Gains transaction - but only if it is a "one off" and has a "Capital" element to it. If that is the case, you could trigger the additional Capital Gains Tax allowance of over £8,000 which oterwise goes to waste each year.
Just a thought.
>> Edited by Eric Mc on Friday 10th September 08:29
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