Sole trader tax benefits?
Discussion
As I get closer to retirement I've been musing about how I will want to fill my days.
One thing that's absolutely certain is that I'll be doing a lot more photography. Obviously top end kit is not cheap, so I figured it might be worth trying to sell some of the photos to offset some of those costs.
I'm not going to take on commissions or anything like that, but figured it's not much extra effort to set up a website and/or upload decent shots I'm taking anyway to places like shutterstock. If I sell some, yay me. If I don't, no matter as they're shots I would've taken anyway, and I won't actually need to make an income from this.
The question is whether there's likely to be any financial benefit from doing so if I was spending maybe £3-4k a year on camera gear, the odd AirBnB as a base for getting up a mountain by dawn and the like. Assuming I'm also incurring a few hundred in costs I wouldn't incur if I wasn't trying to sell any photos, how much might I have to sell to make it worth doing?
I've put this in here rather than the photography section because I'm interested purely in the business and finance aspects, not the separate question of how easy it might be to actually sell photos, so please don't feel like you need to know anything about photography to reply.
One thing that's absolutely certain is that I'll be doing a lot more photography. Obviously top end kit is not cheap, so I figured it might be worth trying to sell some of the photos to offset some of those costs.
I'm not going to take on commissions or anything like that, but figured it's not much extra effort to set up a website and/or upload decent shots I'm taking anyway to places like shutterstock. If I sell some, yay me. If I don't, no matter as they're shots I would've taken anyway, and I won't actually need to make an income from this.
The question is whether there's likely to be any financial benefit from doing so if I was spending maybe £3-4k a year on camera gear, the odd AirBnB as a base for getting up a mountain by dawn and the like. Assuming I'm also incurring a few hundred in costs I wouldn't incur if I wasn't trying to sell any photos, how much might I have to sell to make it worth doing?
I've put this in here rather than the photography section because I'm interested purely in the business and finance aspects, not the separate question of how easy it might be to actually sell photos, so please don't feel like you need to know anything about photography to reply.
Mr Pointy said:
Are you going to sell enough to at least cover your expenses? I'm not sure how long HMRC will accept trading at a loss if the expenses are just reducing your overall tax position.
I don't honestly know, and I'd probably wouldn't bother with the hassle of trying to sell them after a couple of years anyway, as I'd probably get hacked off with other people not liking my stuff! 
As I've only ever been on PAYE, and my retirement income will be limited to pension drawdown and dividend payments other than anything from photos I might sell, I guess the more fundamental question would be whether this sort of thing could even reduce my tax position in the first place? Would I even be allowed to offset business expenses for this against income tax on a pension, for example?
You may be able to tell that I am completely inexperienced in this area!
Basically, you are allowed to claim trading losses against other income. Which raises the question of what is trading?
You might find it useful to see what HMRC's view is. See: https://www.gov.uk/hmrc-internal-manuals/business-...
Also: https://www.taxinsider.co.uk/is-it-a-trade-or-a-ho...
From what you've said, I think your proposed sales will fall into what HMRC consider to be a "hobby", not "trading" & so no tax relief due.
(In the event you do make a profit, then there's a good chance HMRC won't be interested as per their guidance to staff above, and in any event the £1,000 Trading Allowance will probably mean no tax due.)
You might find it useful to see what HMRC's view is. See: https://www.gov.uk/hmrc-internal-manuals/business-...
Also: https://www.taxinsider.co.uk/is-it-a-trade-or-a-ho...
From what you've said, I think your proposed sales will fall into what HMRC consider to be a "hobby", not "trading" & so no tax relief due.
(In the event you do make a profit, then there's a good chance HMRC won't be interested as per their guidance to staff above, and in any event the £1,000 Trading Allowance will probably mean no tax due.)
Keypad said:
Basically, you are allowed to claim trading losses against other income. Which raises the question of what is trading?
You might find it useful to see what HMRC's view is. See: https://www.gov.uk/hmrc-internal-manuals/business-...
Also: https://www.taxinsider.co.uk/is-it-a-trade-or-a-ho...
From what you've said, I think your proposed sales will fall into what HMRC consider to be a "hobby", not "trading" & so no tax relief due.
(In the event you do make a profit, then there's a good chance HMRC won't be interested as per their guidance to staff above, and in any event the £1,000 Trading Allowance will probably mean no tax due.)
That's useful, thanks, although I'm wondering if I might need to dig around for a more recent version of the article there, as I seem to recall HMRC getting far more restrictive about what they let people get away with on Ebay since lockdown?You might find it useful to see what HMRC's view is. See: https://www.gov.uk/hmrc-internal-manuals/business-...
Also: https://www.taxinsider.co.uk/is-it-a-trade-or-a-ho...
From what you've said, I think your proposed sales will fall into what HMRC consider to be a "hobby", not "trading" & so no tax relief due.
(In the event you do make a profit, then there's a good chance HMRC won't be interested as per their guidance to staff above, and in any event the £1,000 Trading Allowance will probably mean no tax due.)
At the level you're talking at, I really wouldn't worry about anything other than the photos you take - at least initially.
You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
StevieBee said:
At the level you're talking at, I really wouldn't worry about anything other than the photos you take - at least initially.
You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
That's pretty much where I'd got to in my thinking, so thanks for confirming! You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
As for how I'd sell them, I suspect that'll depend on where I end up retiring to. If it's somewhere that provides both photogenic local attractions & landscapes and a tourist trade then maybe look at doing a deal with local cafés to hang them on their walls and give them a cut of any sales - a friend does it in her café and it seems to work well for both her and the artists - possibly via a website, local craft fairs, stock image sites etc, etc... I wouldn't mind putting a bit of effort in, but certainly not multiple hours per week on any sort of schedule. I'm retiring for a reason!
Kermit power said:
StevieBee said:
At the level you're talking at, I really wouldn't worry about anything other than the photos you take - at least initially.
You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
That's pretty much where I'd got to in my thinking, so thanks for confirming! You're describing a hobby from which you may receive the odd bit of income.
To take advantage of any tax advantage that may exist in offsetting equipment costs against revenue requires that you register your intent with HMRC. Even as a Sole Trader, that results in the need to separate your personal accounts from your business and other reporting and administration requirements. All of which has the propensity to take the fun out of what you're looking to do.
If your photos prove popular and you find yourself selling a fair few, then you can consider a more formal approach.
How are you intending to sell the photos?
As for how I'd sell them, I suspect that'll depend on where I end up retiring to. If it's somewhere that provides both photogenic local attractions & landscapes and a tourist trade then maybe look at doing a deal with local cafés to hang them on their walls and give them a cut of any sales - a friend does it in her café and it seems to work well for both her and the artists - possibly via a website, local craft fairs, stock image sites etc, etc... I wouldn't mind putting a bit of effort in, but certainly not multiple hours per week on any sort of schedule. I'm retiring for a reason!
Something else to consider is something like https://pixieset.com
It's a subscription based service but enables you to showcase - and sell your work. In the UK, they work with Loxley Colour Labs. You upload your photos and set a price plus a margin on the print costs and they do the rest.
Photography is a part of my profession these days but I used to sell motor sport photos via this platform. Didn't really promote it much, people just sort of stumbled across it and I earned enough to pay for my annual LeMans trip.
Stock Sites are a good outlet too.... although they are very strict on what can and can't be uploaded (no brand names, if people feature, you need a model release form, etc).
One tip for selling via local outlets is to look at doing the framing yourself. The equipment needed isn't too costly, nor are the raw materials and the margins on the end product are super-high.
Good luck - lovely way to spend your retirement!
StevieBee said:
That all sounds like a sound plan.
Something else to consider is something like https://pixieset.com
It's a subscription based service but enables you to showcase - and sell your work. In the UK, they work with Loxley Colour Labs. You upload your photos and set a price plus a margin on the print costs and they do the rest.
Photography is a part of my profession these days but I used to sell motor sport photos via this platform. Didn't really promote it much, people just sort of stumbled across it and I earned enough to pay for my annual LeMans trip.
Stock Sites are a good outlet too.... although they are very strict on what can and can't be uploaded (no brand names, if people feature, you need a model release form, etc).
One tip for selling via local outlets is to look at doing the framing yourself. The equipment needed isn't too costly, nor are the raw materials and the margins on the end product are super-high.
Good luck - lovely way to spend your retirement!
Really helpful, thanks! Something else to consider is something like https://pixieset.com
It's a subscription based service but enables you to showcase - and sell your work. In the UK, they work with Loxley Colour Labs. You upload your photos and set a price plus a margin on the print costs and they do the rest.
Photography is a part of my profession these days but I used to sell motor sport photos via this platform. Didn't really promote it much, people just sort of stumbled across it and I earned enough to pay for my annual LeMans trip.
Stock Sites are a good outlet too.... although they are very strict on what can and can't be uploaded (no brand names, if people feature, you need a model release form, etc).
One tip for selling via local outlets is to look at doing the framing yourself. The equipment needed isn't too costly, nor are the raw materials and the margins on the end product are super-high.
Good luck - lovely way to spend your retirement!
It's a few years away yet though, so who knows, by then people might have AI-powered frames on their walls where they just say "display a nice photo of me and the family on holiday on the Great Wall of China last summer", even if the closest they came was the Great Wall of China takeaway and kebab shop in Skeggy! :hehe"
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff