Has my hobby become a self-employed job? Its one of those thorny questions. For example you love dogs, you have several and you breed from them. At what point does HMRC decide that the money you make from your hobby is taxable? At what point i.e. does it become part-time self-employed job?
HMRC have a business test made up of six questions–
Below is the business test guidance in brief. The main words from the HMRC guidance are in bold with my comments in brackets after relating the guidance t oa dog breeder as an example. To see the guidance in full follow this link : httpsss://www.gov.uk/hmrc-internal-manuals/vat-business-non-business/vbnb22000
- Is the activity a serious undertaking earnestly pursued? (Do you carry out the activity for business or purely for enjoyment? Do you want to make money from selling puppies or are you more concerned with letting them go at cost to a really good home?)
2. Is the activity an occupation or function, which is actively pursued with reasonable or recognisable continuity? (Are there efforts to ensure that puppy sales are made regularly? Are you getting all your bitches pregnant as often as reasonably possible?)
3. Does the activity have a certain measure of substance in terms of the value of supplies? (Is the amount of money you intend to generate from the activity generates enough to be deemed to be business. If you only generate a hundred pounds a year from selling puppies its unlikely to be a business activity)
4. Is the activity conducted in a regular manner on sound and recognised business principles? (Are you advertising or putting the word around that you sell puppies? Are you decisions about your dogs based purely for your dogs as pets or are they influenced by commercial needs? If you are thinking in a businesslike way then you are more likely to be a business.)
5. Is the activity predominantly concerned with the making of taxable supplies for a consideration? (If it is your intention to make money by selling puppies it is more likely to be a business.)
6. Are the taxable supplies that are being made of a kind which, subject to difference of details, are commonly made by those who seek to profit from them? Someone who claims to be part of a known trade or occupation is likely to be in business. Someone who claims to be in business doing something completely improbable and unique is less likely to be in business. (Dog breeding does exist as a business and if your aim is to make a profit and to earn a living it is more likely to be business.)
If you want to be self-employed or need help with your existing business please contact me, I’m Jo from Barnowl Bookkeeping www.barnowl-bookkeeping.co.uk .The services I offer are Bookkeeping, CIS, VAT, Payroll and Self Assessments for the Self-Employed my specialisms are in Hospitality, Construction and Manufacturing industries. Based near King’s Lynn I am close to Downham Market, Wisbech and Swaffham to the South. To the North and East I serve the North Norfolk Coast and Fakenham areas.