Tax return for 2nd company sole trader

ThatChippie

Hi all,
I'm hoping there is someone who has dealt with this before and can help.
i am a sole trader in the construction industry and I am paid / taxed via CIS (construction industry scheme).
this last year, I have been setting up and investing into a second business that is completely unrelated to the primary. The new business has not made any profit yet as I have just been investing into equipment etc.
my question is,
as I use cash basis accounting under a single trading name, can I offset my investments as losses for this tax year?
I'm sure that my trading name is just my full name, but I am asked for the industry that I trade within.
as I will now be trading across two different industries, would doing two separate tax returns automatically offset expenses against the other etc?
sorry that the question may not be that clear, but in a nutshell, I will have paid approximately £30k in tax (paid at source) by my primary company, and -£7k investment in the new start up company.

hopefully someone can decode my ramblings 😄
many thanks 🙏 

Dazed_and_C0nfused

ThatChippie said:

Hi all,
I'm hoping there is someone who has dealt with this before and can help.
i am a sole trader in the construction industry and I am paid / taxed via CIS (construction industry scheme).
this last year, I have been setting up and investing into a second business that is completely unrelated to the primary. The new business has not made any profit yet as I have just been investing into equipment etc.
my question is,
as I use cash basis accounting under a single trading name, can I offset my investments as losses for this tax year?
I'm sure that my trading name is just my full name, but I am asked for the industry that I trade within.
as I will now be trading across two different industries, would doing two separate tax returns automatically offset expenses against the other etc?
sorry that the question may not be that clear, but in a nutshell, I will have paid approximately £30k in tax (paid at source) by my primary company, and -£7k investment in the new start up company.

hopefully someone can decode my ramblings 😄
many thanks 🙏 

Your post is very confusing.  Your thread title  refers to "2nd company sole trader".

Is this new business a company or to you have a second source of self employment as a sole trader?

If you have two self employed businesses then you won't be filing a second return, you would be filing a single return with two sets of self employment pages.

But before anyone can comment on the loss situation you really need to clarify what exactly it is you are doing.

A "company" is a completely different thing to being self employed.

ThatChippie

Thank you, that kind of terminology is something I don’t fully understand, so thank you for clarifying.
i have two self employed businesses.
one is new this year, but i was told by HMRC that I don’t need a separate UTR number or anything like that.
the main issue i face, is that I pay my tax at source as a flat rate 20% through CIS, so I would really like to offset the investment into my new business and claim some of my tax back that would likely have been overpaid if I took that investment into account.

the way I translate it is that I myself am the self employed person, so no matter how many businesses I operate, as long as my total income from those businesses is less than £150k, I can still operate as a sole trader.
i just don’t know how HMRC deal with the o real sum. Whether it’s seen as one or two sets of accounts.
for example,
business one - £30k tax paid at source, minus £5k expenses = £xx.xx +/-
business two - £0 income, £7k invested = -£7k nett.
could that -£7k be added to the £5k from business one as I am still the named sole trader?

TheSpectator

ThatChippie said:

Thank you, that kind of terminology is something I don’t fully understand, so thank you for clarifying.
i have two self employed businesses.
one is new this year, but i was told by HMRC that I don’t need a separate UTR number or anything like that.
the main issue i face, is that I pay my tax at source as a flat rate 20% through CIS, so I would really like to offset the investment into my new business and claim some of my tax back that would likely have been overpaid if I took that investment into account.

the way I translate it is that I myself am the self employed person, so no matter how many businesses I operate, as long as my total income from those businesses is less than £150k, I can still operate as a sole trader.
i just don’t know how HMRC deal with the o real sum. Whether it’s seen as one or two sets of accounts.
for example,
business one - £30k tax paid at source, minus £5k expenses = £xx.xx +/-
business two - £0 income, £7k invested = -£7k nett.
could that -£7k be added to the £5k from business one as I am still the named sole trader?

You were given the answer in the previous reply - you complete a seperate set of self-employed pages for each business.

You would be best seeking the advice of an accountant if you are unsure on the basics. HMRC woukd show an interest in a new venture that had zero income but lots of expenses so getting it wrong might be an expensive mistake.

Bookworm105

1. you do not operate incorporated companies, you are a self employed sole trader (ie an unincorporated "business")

2. in reality you actually have (currently) two separate sources of income, business A (construction industry) and business B (something new)

Business B is incurring start up costs which means it will make a net loss for at least this first tax year April - April (and possibly it will be a while after that before it turns a profit)

Starting from April 24 the default method of preparing your self employed accounts is the cash basis. If you have more than one business, you must use cash basis for all your businesses. 

Where you have multiple self employed (SE) businesses you should keep separate accounts for each so that the profit or loss is calculated for each on its own. You then declare those accounts on separate pages of your personal tax return, ie you do the SE trading pages twice in your case on the same tax return under your existing UTR.

The previous limit of (single or combined) £150,000 turnover has been removed. In essence, if you are self employed with effect from April 24 you report using the cash basis with no upper limit. (Some .Gov webpages have not yet been updated to reflect that change in rules and still refer to the £300,000 upper ceiling)

There has never been an upper limit which forced you to convert from self employed to being a limited (incorporated) company. There are sole traders with turnover in the multi £millions who employ hundreds of staff for example.

Cash basis: Cash basis changes from the 2024 to 2025 tax year - GOV.UK

Given you are not up to speed with terminology and HMRC procedures it might be wiser for you to employ an accountant for at least one year to get you set up correctly. Dealing with losses is one of the more technical aspects of accountancy particularly where you want to offset loss in one against profit in another business stream.

As your turnover is more than £85,000 you must complete the "full" SE pages of your tax return.
The notes that go with those pages actually already answered your question of how to report more than one business but I guess you did not understand what it meant?



HS220 More than one trade, profession, vocation (2024) - GOV.UK

ThatChippie

Thank you both.
that is all really helpful.