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Note: From 6 January 2024, the main rate of class 1 National Insurance contributions (NIC) deducted from employees’ wages reduced from 12% to 10%. From 6 April 2024, that rate is reduced further to 8%, the main rate of self-employed class 4 NIC is reduced from 9% to 6% and class 2 NIC is no longer due. Those with profits below £6,725 a year can continue to pay class 2 NIC to keep their entitlement to certain state benefits. We will include these changes with our updates in the next few weeks.

Updated on 6 April 2024

Calculating self-employed profits: multiple trades

Some people have more than one business (sometimes called multiple trades). For example, they may run a dog-walking business and also be a self-employed courier. There are several points to consider if you operate multiple trades, such as preparing accounts, the trading allowance, losses and how your tax and National Insurance contributions (NIC) are calculated.

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Content on this page:

Preparing accounts

Each trade must be considered separately when preparing your accounts for your self assessment tax return. You must not add together the income and expenses from your different businesses to produce just one set of business records and accounts, because on your tax return each trade must be shown separately.

Example – preparing accounts for multiple trades

India is self-employed and runs two different businesses, as a leaflet distributor and walking and feeding pets. For the 2023/24 tax year, India will need to prepare accounts for her two different businesses. She goes through her bank statements and business records and allocates her business income and expenses between her two separate trades, and calculates profits from each as follows:

Leaflet distribution
£		 Pet care
£
Sales 2,400 3,500
Less: total allowable business expenses -650 -475
Taxable profits 1,750 3,025


India will need to show these as two separate self-employed businesses on her tax return (see the heading Calculating tax and National Insurance contributions (NIC) below).

Trading allowance

The trading allowance allows you to deduct up to £1,000 from your trading, casual and miscellaneous income instead of your business expenses. It is explained in more detail on our Trading allowance page.

If you have multiple trades, then you can only use the trading allowance once. The maximum you can claim in total across all your businesses and any other casual or miscellaneous income is £1,000, but you can decide where to allocate it. This is illustrated in the example of Jay on our Trading allowance page.

Losses

If you make a loss in one or more of your trades you will need to consider how a loss in one trade interacts with your other income, including profits made in your other trades.

Our Trading losses page explains what you can do with these losses. It also explains which loss reliefs you can use, as this depends on factors such as (prior to the 2024/25 tax year) if you used the cash basis or the accruals basis when preparing your accounts. 

Example – multiple trades and losses

Owen runs a car washing business and sells ice creams in the summer months. Owen uses the accruals basis method to prepare his accounts. He bought a new ice cream van in the summer because his old one broke down and this resulted in higher expenses than usual for that business. In the 2023/24 tax year Owen’s accounts show the following:

Car washing
£		 Ice cream
£
Sales 16,300 1,500
Less: total allowable business expenses -1,450 -2,500
Taxable profits / (loss) 14,850 -1,000


When Owen prepares his tax return, he will need to complete a separate self-employment section for each of his two businesses, one for the car washing business showing profits of £14,850 and one for the ice cream business showing a loss of £1,000. He must then decide how he uses his losses. His choices are explained on our page on loss reliefs. If Owen decides to use his losses against his total income for the 2023/24 tax year this will reduce his taxable profits from his car washing business to £13,850 (£14,850 less £1,000).

If Owen decides that he wants to carry forward his loss of £1,000, he can only offset this loss against future profits from his ice cream business and not against any profits from his car washing business.

Calculating tax and National Insurance contributions (NIC)

On your tax return you must record how many different self-employment businesses you have, their trading names, description of the businesses and their respective accounting dates. If you have multiple trades, it would be easiest if you use the same accounting date wherever possible. Please note that from the 2023/24 tax year onwards there are new basis period reform rules which may impact the accounting period you decide to use for your multiple trades.

You then need to provide details of the income, business expenses and any adjustments to profit for each individual trade.

However, your income tax and NIC will be calculated on the combined total of your profits from all self-employments.

Example – calculating tax and NIC for multiple trades

If Erin runs three multiple trades and in the 2023/24 tax year makes taxable profits of £3,800, £12,000 and £5,500 respectively then, assuming she has no other taxable income, her tax and NIC would be calculated based on total profits of £21,300 (£3,800 + £12,000 + £5,500).

£
Profits from self-employment

21,300
Less personal allowance

-12,570
Taxable income

8,730
Tax at 20% (£8,730 x 20%)

1,746.00
National Insurance contributions (NIC)

Class 2: £3.45 for 52 weeks

179.40
Class 4: (£21,300 - £12,570) at 9%

785.70
Total tax and NIC (£1,746 + £179.40 + £785.70)

2,711.10


As you can see from the example above, Erin’s income tax and Class 4 NIC are calculated using the total of all three profits from her self-employed businesses.

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