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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15977
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If my drawings from business are more than the net profit

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If my drawings from business are more than the net profit what should I be declaring to the revenue


Is the business a limited company or a sole tradership?

Customer: replied 1 year ago.
It's a partnership


Each of the partners is taxed on their share of the trading profit regardless of drawings so you should report the income and expenses which will give you the profit. Clearly, there may be capital allowances to claim. Take a look here for more information on drawings and profit.

I hope this helps but let me know if you have any further questions.

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Customer: replied 1 year ago.
Sorry if I am being daft but do I claim my drawings or just the profit?

You ignore the drawings. You work out the profit (income less expenses ignoring drawings) and divide it between you and your partner. Unless you lent put cash to the business before you started it and are now repaying that loan to yourself, if you keep drawing out more than you make in profit, you will be overdrawn at the bank. By drawing out more than you make, you are effectively borrowing profit you have yet to make and may never make.