When to Declare 'No Longer Trading'

pennypincher3562

Hi

I'm registered with the HMRC as a 'sole trader.' In past years, I've made a profit, and paid tax on it.

In the past 2 years I've not made a profit, and I'm that my 'business' is really now becoming a 'hobby.' I still receive the very odd cheque from companies for 'a couple of hundred' at most, but overall I'm making a loss, if I take into consideration my expenses.

Should I say to HMRC I'm no longer a sole trader, and I can I backdate this declaration e.g. to the beginning of this year?

Thanks
PennyPincher3562

Dr_Teeth

No. If you're still receiving income, then you're still trading.

pennypincher3562

Thanks Dr Tooth, but couldn't issues arise if I am granted a tax rebate for losses on what essentially has become a loss making hobby? I cant go into precise details here, but I've literally received a single cheque in one year, and it wasn't a lot.

Thanks
PennyPincher3562

TheCyclingProgrammer

Dr_Teeth wrote: »

No. If you're still receiving income, then you're still trading.

Probably but not necessarily. There are more tests to determine trading status than simply receiving income.

That said, HMRC are likely to take the view that any income is a continuation of trade if you're effectively doing the same thing.

It would do no harm to ring HMRC and ask them but they will probably insist on OP continuing to fill out a SA regardless of whether or not the income is treated as freelance/additional income or trading income. It could potentially save unnecessary NI though.