To not do a self assessment for my hobby?

[Pullyers]

I have an expensive hobby that I put many hours into in my spare time. I get a few thousand a year from selling a few things but my all costs are significantly higher, it's a hobby I do for enjoyment not to make money. Do I need to do a self assessment? The thought of keeping every receipt and all the stress and hassle just sucks the joy out of what is simply a hobby. Can I just not do it? What happens if I don't do it? Fines... prison?!! Thanks in advance! Ps don't want to say what hobby is as quite niche.

I wouldn’t say this is a business. I wouldn’t bother.

That’s a really good explanation MerryBerry

HMRC are really helpful on such things. Ring them, tell them the situation and see what they say.

I’m in the same situation and haven’t bothered as it’s not my main job and there’s no profit. I am slightly scared in case I get in trouble . Where I live, not UK, I found a page at the tax dept that said if the reason for making the items is for a reason other than to gain money then it’s tax free. I would do this even if I didn’t occasionally sell pieces . The money all goes back into more materials . See if you can find anything like this in the UK .

That’s a great explanation Mary. From what you said op, I’d think you are talking about scenario no 2. Is that not the case? I’m just a bit surprised at all the comments that you need to file a return.

You probably need to prove you are not making a profit

Contact HMRC to check
You can get into trouble if they otherwise learn - which can easily happen - that you have undeclared income, because they won't know your expenses are higher

They will probably say to fill out a tax form unless your total turnover - not profit - is below a certain amount

Organise all your receipts for income and expenses

Do not just ignore this - ask them.

If you don't fill in an assessment, but then HMRC decide you should have ....
the penalty can be a punitive fine, higher than the profit they claim you made since you first started,
or just a fine for not completing a return on time.

It can cause you aggravation for years afterwards, as they might keep checking up on you

If you are genuinely making a loss every year, then wouldn't that reduce your tax liability at your actual job? E.g. you are paying tax on say 30k through PAYE, but your income is only 28k if you are making a 2k loss on your other job, so i think you would be overpaying and due some back.

However, you are probably not making as big a loss as you think, if you exclude all the costs which you are not allowed to count as business expenses.

I think they have been clamping down on ebay/etsy etc seller's in recent years. I'd phone to check.

So you’re not selling the things your making, you’re just selling the left over materials? Surely that’s just selling second hand stuff? I don’t fill a tax return for the car boot sales I do, is this not just the same thing?

I do run (several ) Businesses and I would say scenario 2 applies as the balance that is being sold off is not the majority and is not being done as a main source of income or advertised as a business - just selling off of extra uneeded items. But would also say do phone them and talk it through - the advisors are usually pretty good and will explain things thoroughly

Another one to advise giving them a call. We did similar for DH's hobby and got clear advice and now we don't need to worry about doing the right thing or any tax queries.

You need to do the paperwork to demonstrate what you have told us.

You probably need to prove you are not making a profit

And you do this by keeping a few receipts, a simple spreadsheet and completing a tax return, which really isn't complicated or anything to worry about and if it is time consuming, that would suggest that the selling bit is more than a hobby and might legally count as a business and hence need a tax return. Whether you make a profit out of the endeavour is irrelevant.

But op, you really need to ask HMRC as no-one on here can give a definite answer without a full picture of what you are doing.

It's not hassle - it'll take 2 mins!

Good luck on the phone, waiting an hour before someone from HMRC talks to you.

@frenchknitting - if, what is being done, is not a 'business with a view to profit' then you cannot offset the losses against income from PAYE work.

That is to stop the situation where everyone somehow contrives to make losses purely to offset.

I am fairly sure, in the OPs case, that HMRC will be happy it is not a business and not require a return.

I think you may need to declare anything over £1000. Say for instance I buy £2000 worth of material and sell £500 new, the government isn't concerned about what's happened to the remainder, but whether you sold the £500 for more than 25% of the original price thus did you make a profit on that. If the profits exceed £1000 then yes you will need to declare but you need to keep really good records because otherwise they could see your sales amounts only.

If you’re making such a loss surely you need another hobby?

Check out the trading allowance.

As others have said, it's when you earn over £1000. if you do not earn any profit you still have to submit an assessment and list your income and allowable outgoings.

You cannot count outgoings as expenditure on your hobby. You can count outgoings on the material for the item you sell. So if you invest £100 in the 'material' for the item - and solely for that item- and sell it for £200, you have made £100 profit.

Do this 10 x and it's £1K so you need to start declaring it.

You might want to find a local accountant and take advice.

I don’t fill a tax return for the car boot sales I do, is this not just the same thing?
@Kungfupanda67

Well you should be doing one! Any income earned over £1K has to be declared along with interest from savings accounts unless you have opted for tax-at source if you don't pay tax at all.

If you go on the HMRC website they have a question and answer forum where a tax advisor will tell you what you need to do.

The figures are irrelevant if you’re not actually running a business. Read through what MerryBerry said and call HMRC to double check if you’re unsure.

You don't have the choice though. You have to - it's a legal requirement.

It's also a lot more straightforward than you probably think. As long as you're keeping good records of income and expenditure.