Author: Glenn

Running more than one self-employed business? HMRC will not always treat them as separate. Whether they are taxed as one combined trade or multiple depends on how your activities relate to each other. It is not a matter of choice, it is about how your business is run in practice. Get it right to avoid costly mistakes.

When someone has more than one self-employed income, one of the key issues to consider is whether to combine all profits under a single business activity or treat each separately. This depends on the nature and relationship of the activities. HMRC’s manuals set out three possible scenarios:

1. Separate Trades

If the new activity is run independently, with different staff, stock, or customers, it is treated as a separate trade. This means each business is taxed individually, and the commencement rules apply to the new one. No merging takes place unless operations later combine in substance.

2. A New Single Trade

If the new activity transforms the original business significantly, so much so that the old trade effectively ends, then both are treated as forming a new trade. The cessation rules apply to the original trade, and commencement rules apply to the new, combined business.

3. Continuation of Existing Trade

If the new activity merely expands the existing business without fundamentally changing its nature, it is treated as a continuation. Profits are combined and taxed as one ongoing trade, with no change in basis.

Understanding whether activities form one trade or multiple is crucial for correct tax treatment. It’s not just a matter of choice. It also depends on the facts and how the businesses operate and interact.

We would be happy to help you review the structure of your business to ensure compliance with HMRC guidance and avoid unexpected tax consequences.

Thinking of transferring your sole trader or partnership business into a limited company? Incorporation Relief can help defer any capital gains tax on assets like goodwill. If the entire business is transferred in exchange for shares, the relief applies automatically, no claim needed. Make sure you understand the rules and deadlines, especially if you plan to opt out.

When a sole trader or partnership transfers their business into a company, a capital gain may arise. The gain is based on the market value of the business assets (including goodwill) at the time of incorporation, compared to their original cost.

However, businesses incorporated in this way may qualify for Incorporation Relief. To benefit from this relief, the entire business, along with all its assets (excluding cash, if applicable), must be transferred as a going concern in exchange, wholly or partly, for shares in the new company.

Incorporation Relief is automatic if the conditions are met. There is no need to submit a claim. The relief defers the capital gain by reducing the base cost of the new shares by the amount of the deferred gain, effectively postponing any tax until the shares are sold.

Although the relief applies automatically, a taxpayer can elect for it not to apply. This must be done in writing, and the election must be submitted by 31 January, two years after the end of the tax year in which the incorporation occurred. For example, for a transfer in the current 2025–26 tax year, the election deadline is 31 January 2029. The election deadline is reduced by one year if the shares are disposed of in the year following that in which the business was incorporated.

From April 2025, Agricultural Property Relief from Inheritance Tax now extends to land under qualifying environmental agreements. This means landowners entering long-term stewardship schemes will not lose IHT relief. From April 2026, a new £1 million limit will apply to combined APR and BPR claims—making timely planning more important than ever.

Agricultural Property Relief (APR) is a relief from Inheritance Tax (IHT) that reduces the taxable value of agricultural land and property when it is passed on, either during a person’s lifetime or after death. It allows up to 100% relief on qualifying agricultural land used for farming.

The scope of APR was extended from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or relevant approved responsible bodies. This expansion of the relief helps to better support environmental land management without penalising landowners for switching from farming to environmental use.

The new rules will benefit individuals, estates, and personal representatives where agricultural land is shifted to long-term environmental use under formal agreements. Previously, land removed from active farming for environmental schemes could have lost eligibility for APR.

From 6 April 2026, broader reforms to Agricultural Property Relief and Business Property Relief are set to take effect. While relief of up to 100% will still be available, it will apply only to the first £1 million of combined agricultural and business property. Beyond that threshold, the relief will be reduced to 50%.

A trade mark is a vital tool for protecting the identity and reputation of your business. It can take the form of a name, logo, slogan, shape, or even a sound, and once registered, gives you exclusive rights to use that mark in connection with specific goods or services. In the UK, trademarks are registered through the Intellectual Property Office (IPO), providing legal protection across the country.

The main value of a trade mark lies in safeguarding your brand. A registered trade mark prevents others from using the same or a similar mark in ways that could confuse customers or damage your reputation. Without a trade mark, your business is more vulnerable to imitation or misuse, which can lead to costly disputes or the need to rebrand entirely.

Brand recognition is another key benefit. When customers see a trade mark, they associate it with certain standards of quality and service. This builds loyalty and trust, helping to secure repeat business. A strong trade mark becomes a shorthand for everything your business represents, giving you a competitive edge.

From a commercial perspective, trademarks are valuable assets. They can be sold, licensed, or used to attract investors. As your business grows, a trade mark can open up opportunities for franchising or partnerships. For businesses looking to scale, having brand protection in place adds credibility and can enhance the overall value of the company.

A registered trade mark also helps you avoid legal issues. Before registration, the IPO checks for conflicting marks, reducing the risk of infringement. And if someone does attempt to copy your brand, having a trade mark gives you strong legal grounds to enforce your rights and prevent further misuse.

In summary, applying for a trade mark is a practical and often overlooked step that can offer long-term protection and commercial benefits. It gives peace of mind, legal clarity, and helps to build a stronger, more trusted business. Whether you are starting out or looking to secure an existing brand, registering a trade mark is a sound investment in your business’s future.

When someone agrees to become a director of a UK limited company, they take on a set of legal responsibilities defined under the Companies Act 2006 and other relevant legislation. These duties are not just symbolic – directors have a legal obligation to act in the best interests of the company, its shareholders, and, in certain cases, its creditors.

Statutory duties under the Companies Act

The core legal duties are set out in sections 171 to 177 of the Companies Act 2006. These include:

• Duty to act within powers – Directors must follow the rules set out in the company’s Articles of Association and only use their powers for proper purposes.
• Duty to promote the success of the company – Directors must act in good faith to promote the company’s success for the benefit of its members. This includes considering long-term consequences, employees' interests, the company’s reputation, and its impact on the environment.
• Duty to exercise independent judgement – Directors must make their own decisions and not be unduly influenced by others.
• Duty to exercise reasonable care, skill and diligence – This duty combines objective and subjective standards. A director must show the care, skill and diligence that would be expected from a reasonably diligent person with their knowledge and experience.
• Duty to avoid conflicts of interest – Directors must avoid situations where they have or could have a conflict of interest with the company’s affairs.
• Duty not to accept benefits from third parties – They must not accept benefits that arise from their role as director if it could lead to a conflict of interest.
• Duty to declare interest in a proposed transaction – Directors must declare any personal interest in a transaction or arrangement the company is considering.

Other legal obligations

In addition to the Companies Act duties, directors must ensure that the company complies with its legal responsibilities. This includes filing annual accounts and confirmation statements with Companies House, ensuring tax compliance with HMRC, operating PAYE schemes where appropriate, and observing health and safety laws.

Personal risk and accountability

Directors can be held personally liable for breaches of their duties, particularly if the company becomes insolvent and they have failed to act properly. Disqualification, fines, or even criminal penalties can follow in serious cases.

Accepting a directorship is a serious commitment. Directors must understand their obligations and, if unsure, seek professional advice to avoid legal pitfalls.