Operating as both a sole trader and Ltd Co?

DoctorStrange

Can one operate as both a sole trader and as a director or a limited company at the same time?

For background information, I am a director of a limited company and in my spare time (i.e. time I'm not working on company business) I've been trialling some new software which may be of interest to potential clients. It is all very early days and there's nothing too exciting going on, but I'm wondering if it's possible to classify that development work under a 'sole trader' banner and sell the IP to my IT company for, say, £500?.

If so, would that qualify as a legitimate software purchase by the LtdCo and would I be able to take the £500 tax free given it's under the £1k annual sole trader allowance?

My PAYE earnings are quite high, but not sure if that is relevant or not. Would the £500 be added to my earnings for income purposes or is it possible to have say £50k in employment income taxed under PAYE and then another £1k tax free under sole trader allowances?

Dazed_and_confused

The answer to your opening question is yes.

But I suggest you read up on the finer detail of the "trading allowance". There are rules specifically around income which is connected to a company you are employed by*

*that is probably an over simplification but definitely something you need to fully understand.

Pennywise

Whose facilities/equipment did you use when you "personally" designed the software?? I assume it was a personal computer, personal desk, personal broadband connection, using personally owned software, etc, etc? If you used anything owned or financed by the company, then almost certainly from a legal point of view, the company already owns it and therefore it's not yours, personally, to sell.

DoctorStrange

Thanks D&C - I figured as much but was kinda hoping there might be an angle here.

Pennywise, you assume correctly - everything was done on my personal equipment. Thanks for checking...