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GeeGee85
New Member

4 Posts

Posted - 03 April 2021 :  19:49:07  Show Profile  Reply with Quote
Hi there

I'm hoping someone can help. I currently work within an organisation but have aspirations of starting my own business (sole trader) and building this up until such time as I can leave my primary employment and work privately full time.

I'm aware that during this transitional period any money I earn through the business will be over my earnings my trust deed payments are based on. I don't plan to take an income fom this until I begin to reduce my hours in my primary employment. I'd only take as much to maintain my current income. However, I'm aware there would be money there not being used.

Where does this leave me re TD? Any business earnings would be due to be taxesd in 2022. I plan to let them know my plans if I go ahead but I don't want to be holding money if I should be giving it to them. Does anyone know how this all works? If I just leave the money to accumulate could I just give that amount at end of each year after tax and they take whatever they are entitled to?

GeeGee85

GeeGee85
New Member

4 Posts

Posted - 03 April 2021 :  20:03:57  Show Profile  Reply with Quote
I had another thought after posting. My role requires me to attend supervision and training to meet my professional code of conduct. The business would pay for these in independent practice. Is this OK or would it be classed as taking a wage?

GeeGee85
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TDA (Debt Adviser)
Trust Deed Expert



13705 Posts

Posted - 05 April 2021 :  07:33:00  Show Profile  Reply with Quote
Welcome to the trust deed forum GeeGee85.

If you start a business as a sole trader then there is very little distinction between you and the business. Your trustee would consider your profits (assuming you make a profit) to be income that could be taken into account when calculating your trust deed payment. This applies whether you choose to spend those profits or not.

This might work a little differently if you opened up a limited company instead. Unless the company was very profitable and/or held lots of cash, your trustee would likely only take into account the salary and/or dividends that you actually take from the firm as being income.

Allowable business expenses (like relevant training courses) will of course reduce your profits, which you may or may not consider to be a good thing in the circumstances!

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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GeeGee85
New Member

4 Posts

Posted - 05 April 2021 :  17:27:40  Show Profile  Reply with Quote
Thank you for your very helpful response TDA. I think I will just have to weigh up whether to start up during my TD or revisit this in a couple of years when things will be less complicated.

GeeGee85
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TDA (Debt Adviser)
Trust Deed Expert



13705 Posts

Posted - 06 April 2021 :  09:03:51  Show Profile  Reply with Quote
I'm not sure it has to be too complicated GeeGee85.

The trust deed is really just one of many factors that will guide you towards the bext time to start your own business.

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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Kevin Mapstone
Trust Deed Expert



3969 Posts

Posted - 06 April 2021 :  09:50:13  Show Profile  Reply with Quote
I would recommend you discuss your plans with your trustee, GeeGee85. They may be happy to allow you to maintain funds in the business for working capital - it's a reasonable requirement for most businesses and is especially important given that you are unlikely to have access to credit.

Recommended Partner & Trust Deed Expert - Ask me for help setting up a Scottish Trust Deed
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GeeGee85
New Member

4 Posts

Posted - 08 April 2021 :  15:59:32  Show Profile  Reply with Quote
Thanks for your helpful replies. I will get in contact with them.

GeeGee85
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