Sole Trader money moved from personal ac to cover business overdraft is it Income?

echo57

Hi all,

I am currently doing my tax return and have hit a question. I was a sole trader and this is my last tax return, I ised to have an account to do this but since there is only 7 months worth I thought I would calculate it this time.

My question is, in the 7 months I had a sales income of £132, but all the time having bills come out of my business acccount, of course the sales income was not enough to cover the bills and I therefore transferred money from my personally account from money earnt through my second employed (PAYE) job to my business account to make sure I didn't go over my overdraft.

So now I am doing my profit and loss and wondering if the money I transferred to ensure I stayed in my overdraft is classed as income, and should be included in my profit and loss? Obviously I have paid tax on the money I moved already through my PAYE job, so I am unsure if it would need to be put in again?

I would appreciate anyones help on this.

Thank you.

longforgotten

Any monies you banked in your business from your private account is exactly that 'private' or in accounting terminology 'capital introduced'. Therefore do not include it in your sales figure. Obviously, from what you have said, you have made a loss because your business expenses are greater than your sales figure. Hope this helps echo.

echo57

Thank You Longforgotten, I did think that but need it confirming. Thanks

roger196

It is worth putting the source of capital introduced to prevent possible enquiries. If the taxpayer is unable to prove that the capital introduced came from a taxed source or from an inheritance, the revenue view is that it is likely to be undeclared takings of this or another business. In your case clearly not taxable.
If you have made a loss, there are provisions for this to be set against other income. You will need to read up on losses on www.hmrc.gov.uk