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.

@JinglinghellsBells you don’t have to declare income from selling unwanted goods, as long as they weren’t bought to resell with the view to make a profit. This seems to describe what the OP is doing, as well as a car boot sale

You are not in business with ‘a view to a profit’. There is no requirement to self-assess this income unless and until it is of substantial size that you go over the VAT threshold. HMRC will not allow you to claim the losses for what is your hobby. You still need to keep records to prove the losses and hobby status if asked.

Of course you do! You know that you do! Earnings over £1,000 need to be declared

AI203 what utter nonsense are you spouting?

www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income is the guidance on the £1000 allowance other posters have mentioned.

But if you are not trying to make money, I don't think you need to worry. As pp said, you are just selling off unwanted stuff. If you are making stuff which you sell at profit, then selling off spare materials, that's a business. If you are making stuff for your own use, or that you give away, then sell off spare materials, that's just a hobby surely?

Taxes Acts and HMRC practice Paws and something I know a lot about.

I think if you’re selling things which are the product of the hobby you do, if you’re selling 2nd hand goods you don’t.

If I was receiving payment for the goods via bank transfer...in fact anything other than cash, then yes I'd declare it and do the tax return as the HMRC can assess your account and might want the income to be explained. I completely get your frustrations OP. It IS a pain in the ass. I ran a small garden design business for a while, much of the work was done as a hobby / favour for a mate, I made bugger all income after costs. Even once I wrapped the businesss up, for about 5 years after, HMRC insisted on a SA return each year!

OP has a hobby. It is an expensive hobby and makes significant losses each year. That is NOT a trade.

I don't get why people are saying that OP earns more than £1000. If you look at the HMRC calculator it seems clear to me that "earning" gross £1000 means £1000 profit before tax. If you answer that question to say that you earn less than £1000 there are subsequent questions that as about turnover being as high as £50,000.

From what I understand, it all depends if she sells what she makes.

Not selling 2nd hand products she has used.

If she makes money from what she is creating, that will determine wether she needs a self assessment.

The fact that she sells makes it a craft hobby and therefore she should look very carefully at the HMRC requirements.

Since 2017 any hobbyists with a gross turnover of less than £1K has been offered the £1000 Trading Allowance as san easier way to comply with HMRC rules. That is a GROSS allowance and OP exceeds it and so cannot use it for a simplified 'return', or lack of.

That OP works means she is paying over the normal tax threshld, I am assuming, so any income her hobby generates will be taxable. In her case the loss will be taken into accoint, she mayget a rebate.

But either way, she needs to fill in a self employed / sole trader return. If she chooses to do Cash Basis return then this is a simple matter: Incomings : outgoings: balance. But it does mean keepiing receipts etc.

Yes, I am a Sole Trader and yes, one of my income streams is an art / craft business that is currently losing money, as I set up and find my market.

You intend to make a profit Curious. The OP does not.

The fact that she sells makes it a craft hobby and therefore she should look very carefully at the HMRC requirements.

She sells things that are surplus and have no use for. Which is not dissimilar to selling your old clothes on Ebay. Bought for personal use and selling as you dint want it anymore.

If she is also selling the item she makes, then she would need a self assesment doing. As she is making that product with the intent to sell.

Are you selling items you make ? If so yes to self assesment
If you are selling left over product / stuff you dont need , unless you are selling it to make profit then you probably dont need to

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

@CORSACORSA so hobbies should be other free or profit-making? PMSL! All those people spending thousands on bikes and horse tack and chess sets and paints and race entry fees and football boots have got it totally wrong then

Do you make a profile on the part you sell? for example if you bulk buy 20 units for £2000. i.e. cost is £100 per unit, then have 1 unit left over and sell for £200 you are making a profit on that 1 unit regardless of how much you have used for your personal hobby.

As you are talking about thousands, best to talk to HMRC to make sure you are doing what you need to.

Unfortunately, there is no simple answer. It depends whether you are classed as trading.

If it is trading income, you will need to declare it. If they are capital disposals, they are likely to covered by the chattel exemption.

Look up the 'badges of trade' and at least keep a rough record of turnover in case HMRC say you received more.

It's really irritating as, for example, I may buy something for my hobby which costs £2000. I use part of it and sell rest I don't nees for say £200. Rinse and repeat. As you can see by the end of the year I have spent a lot of money, far far more than the surplass I sell, which in turn just goes towards the next thing.

The part you use for your hobby isn't allowable - it's your hobby. It's the proportion you sell which is your allowable expense. So if you sold 10% of that item, the cost was £200, sale price £200, no profit/no loss. So, the crux of the matter is whether you're making any profit on the bits you are selling, i.e. whether the apportioned cost of what you don't need is more or less than you sell it for.

If you never make a profit, and you never buy or make anything with the intention of selling it for profit (i.e. the definition of a trade), then no need to register as self employed and no need for SA return.

You intend to make a profit Curious. The OP does not. Oh, I understood that! I was just making the point that she knows what she does best and she needs to look carefully. I think I was trying to address all of the points raised, there is so much misunderstanding... and I seem to have added to it I think I should have added a sentence betwen paragrpahs 1 and 2, to make any kind of sense! Maybe like this:

If she is only selling off her surplus bits then it would be the same as selling off old clothes, personal items BUT for peace of mind a quick read through the various HMRC case studies would set her mind at rest!

Ok, I was a personal tax advisor in a very recent previous life. Here goes:

OP I think as PP have stated you are incorrect in assuming you make a loss on your hobby as you do not appear to have apportioned the expense.

As you turnover over £1000 you need to look instead at the 9 “badges of trade” which determine if you selling surplus is a side business. It could be argued that by selling surplus you have a profit-seeking, or at least loss-mitigating motive.

If you were my client I’d have two key questions. If selling surplus makes a loss why do you do it? And, how long between the purchase and sale of the items?

www.elverconsultancy.co.uk/what-are-the-badges-of-trade/

you don’t have to declare income from selling unwanted goods, as long as they weren’t bought to resell with the view to make a profit

Kumfupanda- this is a grey area. There will be people who buy off ebay and then re-sell on ebay (if they get a bargain.) Likewise, people might pick up a vase at a charity shop for 10p and sell at a car boot sale for £2.

People might pick up junk at a car boot sale then re-sell it as an antique for 10 x the price they paid.

Lots of people trade like this and make money which ought to be declared.

I’m curious, and know you won’t specify the hobby, but if you find yourself with surplus to sell, would there not also be other people doing the same hobby also selling surplus? Why do you always buy new instead of buying second hand surplus? Is it that people do different things with surplus amounts than you do with the “big bits”?

The problem with asking on a forum like this is that the people who know the answers get drowned out by the people who just THINK they do. Try hard to tell the difference, OP.

I wouldn't bother personally