I've made a confusing mess for my first tax return. Best course of action?

[WD3]

I started as a sole trader last year with different ways of earning, but assumed I was the business and I did not have to separate them. So I have just gone ahead willy nilly using my personal (several, taking advantage of switching incentives) bank accounts and credit cards for everything.

Didn't look into how to do things properly and just kept all receipts and invoices with no books created. I am able to create and expenses and sales list now and have all bank statements.

The first, the handyman business, I bought 3k of tools on a credit card, earned approx 2.7k. of which approx £1200 was profit, but I used this profit to pay for the purchase of materials for the next business. And still have the credit card, which I pay off interest free using my PAYE income, or any other income that comes my way.

The other is a cosmetics business which has costs of 3.5k and £40 sales. (took most of the year to formulate etc, wasn't trading until towards the end of the tax year)

The third is the sale of junk and random items from around my home for approx 1.8k on eBay. This was temporary but I'm assuming I need to pay tax on it as over 1k.

I also am paid via PAYE for a regular job at 17k, which I paid about £900 tax on. Which I assume I will be getting back when I submit my return.

Now where I am getting lost in what to do for my tax return is, if I separate the income streams into separate businesses I've used profit from one so called business to fund another. Leaving the first in debt. I'm struggling to get my head around what to do on my tax return because of this.

Is it possible to merge everything into one business for that tax year? Or do I need to have it up as 3 businesses? I would want the two to be separated in the future though.


Everything will be done properly going forward, but sorting this mess out from last year is looking genuinely impossible.

[SteLacca]

Provided that none of the businesses is an incorporated (Ltd company) then there's no harm aggregating them together, but you'll find it more meaningful to keep them separate.

Simply prepare three sets of accounts, one for each. If any one business has made a loss that loss can reduce profits on the others since, as you quite rightly say, there is no legal separation between you and those businesses.

Ignore funds introduced from elsewhere in your empire. That is simply you using your money to finance any loss that arose, and does not need to feature for tax purposes.

[WD3]

Provided that none of the businesses is an incorporated (Ltd company) then there's no harm aggregating them together, but you'll find it more meaningful to keep them separate.

Simply prepare three sets of accounts, one for each. If any one business has made a loss that loss can reduce profits on the others since, as you quite rightly say, there is no legal separation between you and those businesses.

Ignore funds introduced from elsewhere in your empire. That is simply you using your money to finance any loss that arose, and does not need to feature for tax purposes.

Thank you for your reply.

I have come across information that suggests that the 1.8k of sales on ebay is not taxable as the items are literally used junk I have not bought to sell on, just personal items that were sold at a loss. Would you know if this is correct?

[bd6759]

Trading involves buying and selling.

Selling excess household products that were purchased for personal use is not a trade.