What you do with your creations?

[Rhossydd]

It doesn't require a lot of paperwork simply because if you're unlikely to exceed the threshold for the simple self employed tax return.

You and I might think that's pretty simple, but you need to bare in mind that many people will have never even seen a self assessment return and a surprising number will also find anything like this beyond their understanding and capabilities.

The only "accounting issue" is knowing how to calculate capital allowances (often referred to as depreciation). In a lot of cases this may be ignored if you treat the expenditure as revenue rather than capital purchase but it's simply enough and explained in the accompanying notes to the tax return.

You're already discussing issues well out of many people's comprehension.

The classic mistake most people make is thinking that they need to a make a profit. Profit and loss are just paper figures. For someone going full time self employed it's beneficial to make as large a loss as possible in the first year. This can then be offset against any tax paid in the previous 6 years and a tax refund is received.

Whilst aspects of that are correct. The important thing in this case is that you need to be able to demonstrate that you're trying to run a profitable business. If HMRC start looking and think you're not serious about running a business, they'll take the appropriate action.

For someone going full time self employed

I don't think that's the intention in this discussion, it's more about supplementing income with the sales from your hobby. An important difference.

 

[Mark Hancock]

A few points
1. The short tax return for self employed income only requires 3 figures to be entered; total income, total expenses and capital allowance. All fully explained in the notes. The other entries are found by simple subtraction. I would hope most people can add and subtract?
2. Capital allowances are fully explained in the tax return notes with easy to understand examples given
3. Losses within the first few years of a business starting up, self employed or company, are expected and would cause no concern to the HMRC.
4. Supplementing income with the sales from a hobby without informing HMRC could be construed as tax evasion. The HMRC has been known to visit craft fairs with this in mind. So it's more sensible to be legal, take advantage of it and reduce one's tax liability.

 

[Rhossydd]

1. The short tax return for self employed income only requires 3 figures to be entered; total income, total expenses and capital allowance. All fully explained in the notes. The other entries are found by simple subtraction. I would hope most people can add and subtract?
2. Capital allowances are fully explained in the tax return notes with easy to understand examples given
3. Losses within the first few years of a business starting up, self employed or company, are expected and would cause no concern to the HMRC.

You all make it sound very simple. I'm sure that as a ex-accountant you found the tax issues of moving to a freelance life fairly easy to understand.
For those supplementing a PAYE income and who may never have had any dealing with tax forms and accountancy it can be hugely daunting.

4. Supplementing income with the sales from a hobby without informing HMRC could be construed as tax evasion.

Absolutely, but firsts step is to actually see if you can sell anything. HMRC won't worry if you phone them on Monday and say 'I sold £150 of turnings at a crafts fair yesterday that cost me £40 to attend, do I need to report that for tax ?'

The HMRC has been known to visit craft fairs with this in mind. So it's more sensible to be legal, take advantage of it and reduce one's tax liability.

This assumes you're actually prepared to try to make it a proper business with everything that involves.

 

[Mark Hancock]

My apologies to the OP as this has got somewhat off thread.

All I've been trying to point out is that anyone on pension or PAYE income who sells their work can reduce the amount of tax they pay each year. It only takes a little research and the ability to add up and subtract.

 

[Mal]

Hi Mark
Wow, this thread has suddenly got very complicated! :?
I have been turning for only a year or so, (hopefully getting better as time goes on) and I got to the stage where I brought my latest creation into the house, only for the wife to cry, ' not another bl**dy bowl!!!'
Too much dusting to do apparently, so I put a few photo's up on my facebook page, and friends seem to like my bowls and tea light holders, so I managed to sell quite a few bits before Christmas.
I just about managed to cover the cost of materials and got a few beers out of it, but as I am thoroughly enjoying my new hobby, just the mere fact that someone liked what I had made enough to want to buy it for a couple of quid, is quite good enough for me
May think about a craft fair one day, but am probably too critical of my own work. :?

 

[markslathe]

Ok i got a head ache now lol,thanks for all the replies and honest comments,all appreciated.

It was just an idea i had,i wanted to try and turn pieces and see if i was any good,i wondered if money could be made from it,i think in time i could be ok at it,i already have a face book page from previous en devours making bird tables/garden furniture etc etc,all rough stuff tbh,but i have made a few quid from it.

I wanted to venture out and see if i am any good at turning as i love working with wood so much,i thoroughly enjoy turning,even though i have only be at it for a week or so,it relaxes me,makes me feel good when i have made something,and i get a lot of pleasure from other people getting pleasure from things i have made.(it isn't about the money),but it would be nice to do something you love doing for a full time job,im sure we all agree on that?

For the moment i am simply loving making creations,money is secondary.

Thanks again for all replies/comments all respected and appreciated.

 

[markslathe]

Hi Mark
just the mere fact that someone liked what I had made enough to want to buy it for a couple of quid, is quite good enough for me

Exactly Mal.