Tax and hobbies.
Discussion
What's the current tax situation if you buy something which is broken, fix it and sell it?
Presumably you'd pay tax on the profit but can you deduct an amount for your 'service' of repairing it?
I'm looking around at possible ways of supplementing my income for when the freight train comes round the corner and hits me (and the rest of the working population) in the face shortly.
Thanks Labour.
5 more years etc.
Presumably you'd pay tax on the profit but can you deduct an amount for your 'service' of repairing it?
I'm looking around at possible ways of supplementing my income for when the freight train comes round the corner and hits me (and the rest of the working population) in the face shortly.
Thanks Labour.
5 more years etc.
If you are carrying out an activity with a view to making a profit - that is the HMRC definition of a "trade" and you should be returning the details to HMRC on a Self Assessment tax return.
Even if you actually lose money on the operation, you should still be returning it to HMRC.
The key point is that you are TRYING to make a profit.
A pure hobby, almost by definition, never makes a profit. So, HMRC are not interested in such activities. On the contrary, if they see someone making returns for an activity that consistently shows losses, they sometimes argue that the activity is actually a hobby and that the losses are not valid trading losses.
The reason they don't want to agree trading losses in these circumstances is because a taxpayer can use trading losses in one activity to reclaim tax paid in other areas, such as another trade, an employment or investment income.
What you are describing sounds to me like a small trading activity which generates a small profit. In theory, this would need to be returned to HMRC on a Self Assessment tax return.
Being a business, the normal rules for offsetable business costs apply i.e. expenditure incurred wholly and exclusively for the purpose of the trade are allowable.
Even if you actually lose money on the operation, you should still be returning it to HMRC.
The key point is that you are TRYING to make a profit.
A pure hobby, almost by definition, never makes a profit. So, HMRC are not interested in such activities. On the contrary, if they see someone making returns for an activity that consistently shows losses, they sometimes argue that the activity is actually a hobby and that the losses are not valid trading losses.
The reason they don't want to agree trading losses in these circumstances is because a taxpayer can use trading losses in one activity to reclaim tax paid in other areas, such as another trade, an employment or investment income.
What you are describing sounds to me like a small trading activity which generates a small profit. In theory, this would need to be returned to HMRC on a Self Assessment tax return.
Being a business, the normal rules for offsetable business costs apply i.e. expenditure incurred wholly and exclusively for the purpose of the trade are allowable.
Edited by Eric Mc on Friday 19th March 11:54
Thanks Eric.
Just to clarify the situation - I am not doing this but I am thinking about things I could do at some point in the future.
Are there set amounts allowable for services eg if it takes 4 hours to carry out a repair can I claim a standard amount per hour or would I just make something up?
Just to clarify the situation - I am not doing this but I am thinking about things I could do at some point in the future.
Are there set amounts allowable for services eg if it takes 4 hours to carry out a repair can I claim a standard amount per hour or would I just make something up?
Whether a person wants to break the law or not has their own conscience tio deal with.
I can only state what the law requires a trader to do. It is up to the individual to decide whether he is comfortable in engaging in a criminal activity by failing to disclose their business.
I can only state what the law requires a trader to do. It is up to the individual to decide whether he is comfortable in engaging in a criminal activity by failing to disclose their business.
Edited by Eric Mc on Sunday 21st March 08:44
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