For Income Tax and National Insurance Contributions (NIC) purposes, it is possible for an individual to have two separate businesses – in your case the haulage business and the landscape gardening business. You will need to notify the Inland Revenue of the commencement of the gardening business. When the time comes to complete your personal Tax Return you will need to complete two Self Employed forms as part of your year end Tax Return. Alternatively if either or both businesses are limited companies you will have to complete a Corporation Tax Return for the incorporated business (es).
If both businesses are in your personal name (i.e. not partnerships or limited companies), for the tax year, profits from your two Self Employed business will be added together (with other income such as interest received) in the tax year to calculate your total taxable income. Tax on your self employed business profits is payable in two instalments on 31 January and 31 July together with an adjustment of any balance owing the following 31 January.
Let’s say you started the landscape gardening business in July. You will be assessable to tax on your earnings to 5th April in the next year, and the first tax and NIC you pay will be on 31st January (10 months further on – so make sure you have money set aside for this). You will be making payments on account of Income Tax and NIC as mentioned above and that 31st January payment will include the payments on any profits for that initial period up to 5th April on the landscape gardening business. Thereafter you will make payments on account just as for your haulage business. If you make a loss on the landscape gardening business in the first period you have the option of setting it off against the current years profits from the haulage business, carrying it forward to a future year or carrying it back.
However for VAT purposes, if you intend that both businesses will be in your name they will count as one business, so if the haulage business is VAT registered the registration and VAT number will extend to the landscape gardening business. If the haulage business is not already VAT registered you will have to register for VAT when the combined turnover of the haulage business and the landscape gardening business achieves a 12 month turnover of £70,000 (or whatever the exemption threshold that year) or earlier if you want to voluntarily register.
The HMRC have rules to protect against “artificial separation” of businesses with the objective of avoiding registering for VAT. The tests they apply look for common management, common employees, common premises and common equipment. It is advisable to bear these issues in mind when setting up the landscape gardening business. They also consider if one business would not be viable without support form the other. You may consider creating a limited company for one of the businesses which might alter the VAT position.
These issues can become complex and it is advisable to talk them over with your accountant who will be familiar with the full circumstances of your situation.