Will my business activities still make only one business?

[gladiol]

Hello, I am planning to start several business activities at the same time, or shortly after one another within the same accounting period, as a non-VAT registered sole trader. I am thinking about stuff like window cleaning, oven cleaning, car interior detailing, house window film installation, car window tinting, conservatory window and door tinting, wall dressing, and maybe also some painting and decorating.

 

For the Income Tax and National Insurance purposes, I would prefer to report all those activities to HMRC as only one business. If I was to run more than one business, I am afraid I would have to keep not only one, but two or more sets of business records, which would cost me a lot of extra time as well as extra money in accounting fees.

 

Does anyone know if there is any official guidance or case law on how much similar various business activities should be so that one can still conveniently place them under "still only one business" umbrella for the Income Tax and National Insurance purposes?

 

Would I avoid any potential HMRC penalties for NOT separating multiple businesses (trades), if I described my business for instance as "general handymanship"? Any advice will be most appreciated.

[ericsbrother]

When you inform them of your self-employmet call yourself "gladiol cleaning and domestic services" or the like and then you be entered on to their computer as being employed in whatever category they think fit.

You will only have to prepare one set of accounts for the business and also fill out your personal tax return which will include any other income that is declarable such as interest on savings or divdends, taxable benefits like incapacity benefit etc.

As for accounting, if you start off doing your own accounts on a spreadsheet then it is simple to keep on top of everything. You do not need to employ an accountant or bookeeper, you do not need to supply invoices or receipts to HMRC (but you should keep them for 6 years in case your business income changes massively and they want to see why).

There are different methods of claiming your costs of running your business but just adding up everything you have spent on materials etc and suntracting that from income oon the end of year accounts is the easiest. I used to claim for the allowable mileage for my vehicle rather than showing money spent on fuel, tax, insurance etc as separate items. You dont get into a mess regarding personal use of vehicle then. If you buy a vehicle for business purposes you can claim tax relief of 8% of the purchase price as amortisation per year so spend £5k on a motor and you get tax relief on £400 of your income each year you own the vehicle.

If your turnover is low you can use the short form tax return and this makes life very easy, Turnover minus expenses +income. Transfer this to your personal tax return and submit online so the calculations are done for you. National Insurance is the real pain to work out as there are likely to be class 2 and/or class 4 contributions. HMRC never seen to get this right when you submit online and you may well get a demand a year later for underpayment alomg with interest charged even though it is all their own fault so it may well be worth talking to them over the phone about this when you let them know you are self-employed..

[gladiol]

Dear ericsbrother, thank you very much for your detailed, and overall very useful comment. I have added it up to your reputation on this forum.

 

Especially encouraging is this part of your comment, in which you state that paying an accountant or bookkeeper is not necessary. Did you have any accounting professional to help you just only create and set up your business record keeping system, or did you even this bit execute on your own, without any help?

 

What is rather surprising to me is your problematic experience with producing your NI 2 & 4 figures on your online self-assessment tax return. As far as I know, the rate of NI 2 is flat and depends only on the length of you accounting period, whereas the NI 4 is simply a percentage of your taxable business profits. Did the built-in calculator on the HMRC online form produce wrong figures against your will?

 

Once again, thank you very much for your kind advice.

 

Best Regards

 

Dan

[ericsbrother]

Did my own spreadsheet in excel. Fairly simple to do needing only a few calculation columns.

The NI problems were down to HMRC's online tax return payments portal not calculating class 4 and having a class 2 exemption which they didnt recognise as being valid even though they needless to say created it.

[gladiol]

Thank you for your clarification, ericsbrother. Really rather scary