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TaxVince
TaxVince, Accountant
Category: UK Tax
Satisfied Customers: 965
Experience:  Chartered Accountant >20 years + Qualified IFA
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I have a limited company that presently does only engineering.

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I have a limited company that presently does only engineering. I wish to diversify and start using my photography hobby as a business. Can I work the photography business through the same limited company and as the engineering company is doing very well can I basically subsidise the photography expenses off the engineering profit? For example, travelling expenses to get location photos (I do scenery) and website set up etc for offering my photos for sale?
What happens if the photography business costs a lot but doesn't make much profit but the engineering company more than covers the losses?

TaxVince :

Hi. Thanks for your question. Should you find the answer below incomplete or you are not fully answered, please drop a reply before rating.

TaxVince :

A company can have may business activities hence there is no issue with that. You may need to simply update your memo and articles to include such activities.

TaxVince :

For tax purposes, you pay tax on net profit or loss of all your businesses under the same company.

TaxVince :

Hence if the net is a loss you carryforward the loss.

TaxVince :

Let me know if you are answered?

TaxVince :

If you have any further questions please let me know. IF sorted could you please rate the question before you go.

TaxVince :

Regards

Customer:

So you are saying that I can do this if I wish and lets say 10k travelling expenses are incurred every year, as long as the engineering company can cover this loss I am clear (and also reducing my overall tax bill if the photography does not do well)?

Customer:

Obviously I would set up a website to market the photos I take.

TaxVince :

There are many companies that offer diverse services - good example General Electric which provides financial services and engineering services etc; or Virgin Group etc. All your trading income is combined into one- even though you may maintain separate records to monitor the performance of each division. Travelling costs incurred for business activities are deductible expenses. There is no requirement for the engineering division to make enough profits on its own. As long as all these activities are under the same company. Howev

TaxVince :

Ofcourse the main advantage of using one company is to offset the profits against expenses as i have said above. However separating the activities into separate companies, though the may be not much tax advantages your main advantage in doing this is segregation of liabilities and you avoid cross contamination of liabilities ie in the case of too many losses in one business the whole company can be put for liquidation or made bankrupt even though the other business is doing great.

TaxVince :

Could you let me know if you have any further questions.

TaxVince :

If you have any further questions please let me know. IF sorted could you please rate the question before you go.






Regards



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