Credit Card

[Comm1]

I have been using a personal credit card to make purchases for my business. I'm a sole trader. Someone has told me these credit card purchases will be treated as money into my business and therefore taxable .Is this correct? Thankyou in advance.

[Lambs]

C,

You are taxable as a sole trader on that trade's profits. These in turn derive from trading income, less allowable expenses. Your purchases are not income, but expenditure.

I infer that you/your friend are concerned that, if and when these purchased items come into your business, (or perhaps when you apply personal funds to pay off your personal credit card) then this will be treated as taxable trading income to your business. No. If you are applying your own personal funds to benefit your business, then this is non-taxable "capital introduced" rather than taxable income. Similar to if someone put (say) £500 of their own money into their business' bank account, or introduced their personally-owned laptop into the business.

I trust this makes sense.

Kind regards,

Lambs

[Comm1]

Thankyou Lambs for your reply explaining my query. Much appreciated.

[AGoodman]

As a sole trader, you are your business and your business is you. There is no distinction. There cannot be tax on you introducing or removing funds from the business.