Accounting Question

[Scarlett]

Please can you settle an argument for me?
If somebody owns property and makes a slight profit renting it out, but is also self-employed and makes a business loss, Do they have to be treated as separate businesses, or can one be counted against another when working out income?

[DTCwordfan]

are they registered as separate entities?

[Peter Pedant]

well if you count them together, then they arent separate businesses are they

I think no - they are dealt with separately - dont get his wrong - it really ISN'T worth a HMRC investigation....

and here is the official advice

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4210

which I think pretty clearly says they have to be treated separately. Actually the words used are - can only be carried forward ....

[Buenchico]

As it's just a private individual involved (rather than limited companies or unincorporated associations), there's no tax on either business, per se. The only tax payable is Income Tax, which is payable on an individual's net taxable income. (i.e. the sum of his/her profits minus their losses).

Irrespective of how many self-employed businesses someone is involved in, they can only submit ONE tax return, as there's only one taxable entity. (As stated above, it's the INDIVIDUAL who pays tax, NOT the businesses individually).

The person you refer to can either enter just one business name and description on his/her tax return (e.g. 'Freda Bloggs, general trading and property rentals') or two (e.g. 'Freda Bloggs, general trader' and 'F R Bloggs, t/a Grotty Homes, property rentals'). It won't make any difference anyway, as it's only the TOTAL figures that HMRC are interested in.

[Buenchico]

PP's link refers to "setting losses against future profits".

As I read it, that's not what the question is about!

[ToraToraTora]

think of what's worse for you, that's the answer.