Is it a business or a hobby? Reply

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The criteria used to assess if an activity is a hobby or a business are:

  • The size and commerciality of the activity.
  • The frequency of the activity and transactions
  • The application of business principles.
  • Whether there is a genuine profit motive.
  • The amount of time devoted to the activities.
  • The existence of arm’s-length customers (as opposed to just selling your wares to family and friends).

HMRC have some great examples to help you decided, for example

Gail is a full-time employee working for a stationery company. She pays her PAYE tax on this employment every month.

In her free time Gail makes cushions and uses most of them in her home. Occasionally she sells them to friends and work colleagues for an amount that just covers the cost of materials of £15. Sometimes she makes a loss. Any money she does make goes towards her holiday fund.

She decides to make extra cash by selling cushions on an Internet auction site and starts auctioning three or four to see how they go. They all sell for more than £50, a profit of at least £35 each.

She uses this money to buy more materials and within a month she is selling around ten cushions a week, always at a profit, and is considering setting up her own website.

Gail’s initial sales of cushions to friends are not classed as trading. It lacks commerciality and she does not set out to make a profit. The occasional sales are a by-product of her hobby. Once she begins to auction her cushions, she has moved into the realms of commerciality.

She is systematically selling her goods to make a profit. She will need to inform HMRC about her trade, and keep records of all her transactions. On the level of sales shown in the example the potential turnover of around £26,000 is well below the VAT annual threshold so Gail does not need to register for VAT.

Last year HMRC sent 14,000 letters to traders suspected of running a business and failing to declare this on their tax returns.

Of these, 1,000 letters were sent to people where the taxman has already identified a shortfall on their self-assessment forms.

Some of those targeted make as little as £100 profit online.

HMRC have extensive guidance at https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20050

From April 2017, there will be two new tax-free £1,000 allowances – one for selling goods or providing services, and one income from property you own.

People who make up to £1,000 from occasional jobs – such as sharing power tools, providing a lift share or selling goods they have made – will no longer need to pay tax on that income.

In the same way, the first £1,000 of income from property – such as renting a driveway or loft storage – will be tax free.

Under the new allowances, from April next year individuals with property or trading income won’t need to declare or pay tax on the first £1,000 they earn from each source per year. Should they earn more than that amount they will have to declare it, but they can still take advantage of the allowance.

Should you be declaring your Hobby (Business) to HMRC?

steve@bicknells.net

 

Will you be cashing in on the Green Deal? up to £1000 cash back 3

How does it work for Cashback claims? (launched 28th January 2013)
To qualify for the Cashback householders must:
• have a Green Deal assessment carried out on the property
• get and agree quotes from a Green Deal Provider (this could be directly with a national brand or through a local tradesperson linked with a Provider)
• apply for Cashback voucher online or by phone.
Your Provider may be able to do this for you – ask them
• complete works within three months (six months for solid wall).
Householders can fund improvements through a Green Deal Plan, or pay in other ways, and get the Cashback but they must use a Green Deal Provider to arrange the work. The more improvements a householder makes, the bigger the Cashback.
Householders can only make one claim for the Cashback, but it may cover a package of improvements recommended by the Green Deal assessment. The Government Cashback is separate and additional to any similar offers that may be made by Green Deal Providers.
Customers will receive a cashback payment once Providers have confirmed work has been carried out and the Energy Performance Certificate has been updated.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/65572/6715-the-green-deal-cashback-for-energy-saving.pdf

https://gdcashback.decc.gov.uk/Application/Apply

Green Deal is also available for Businesses but without the benefit of cashback.

steve@bicknells.net

Training Grant of upto £1000 Reply

Matched funding is now available from Skill South East for Leadership and Management Training, the maximum funding is £1000 Grant when you spend £2000 on Training.

Provided you have at least 2 employees and can show that your business has the potential for fast growth you should qualify.

Bicknell Business Advisers are approved providers but we also have access to bartercard trainers who can provide training too.

If you want to know more drop me an e mail steve@bicknells.net