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Where Taxpayers and Advisers Meet

Tax when buying a revenue generating website from self employed profits

Rob5432
Posts:1
Joined:Fri Jan 14, 2022 3:05 pm
Tax when buying a revenue generating website from self employed profits

Postby Rob5432 » Fri Jan 14, 2022 3:18 pm

Hi

This is a simplified version of my situation but I am hoping you can help.

In this current tax year I have been employed full time and have had other projects which have generated self-employed income. My earnings from employment are £50,000 before tax, my earnings from self-employment activities are £100,000 (net profit). If I buy an online business that is generating an income for £100,000 this tax year (lets say for example it is an e-commerce site that sells ebooks and makes £3,000 per month profit.), does that mean I no longer need to pay income tax on the £100,000? Do i have to pay some other kind of tax, and if so, what would the rate likely be?

Thanks for any help in advance.

Rob

pawncob
Posts:4877
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Tax when buying a revenue generating website from self employed profits

Postby pawncob » Mon Jan 17, 2022 10:42 am

You pay tax on your profits. What you do with the net income is up to you, but you can't offset it.
With a pinch of salt take what I say, but don't exceed your RDA

robbob
Posts:3208
Joined:Wed Aug 06, 2008 4:01 pm

Re: Tax when buying a revenue generating website from self employed profits

Postby robbob » Mon Jan 17, 2022 10:54 am

Rob5432

Its ridiculously important that you urgently seek some proper specific advise here ref minimising tax - the amount of tax you could potentially be saving by trading as limited company is ridiculously material - you could literally be paying over double the amount of tax you need to pay short term by not putting simple steps in place.

Note if you need most of the money you earn in your pocket to spend limited company does have some downsides on the higher earnings extraction scenario - so its not as simple as incorporating without looking at the overall situation.

Feel free to pm me if you need to get something sorted pronto - i can't stress how important it is that you take active quick steps if you want to minimise the tax you will be paying - your marginal rate on sole trader profits will start at 42% - be 60% for bracket 100-125k and over 50% between 50k and 60k if you or your partner claim child benefit and will lose that due to sole trader income pushing you into repaying that benefit by a tax charge.
There may be other tax mitigation options possible other than using limited company.

I would say to anyone earning over 100k if they don't do some proactive tax planning the amount of tax you can throw down the drain by doing nothing is somewhat crazy.


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