anyone making money from hobby

[snowcat]

That's getting a bit deep. As Stuvy says ask HMRC. They'd need to know that you are serious about the business and not trying to reduce your tax.

You can normally carry forward losses from one year to the next, but I'm not sure if you can do that to reduce PAYE.

yes unlikely PAYE and Self assessment would work within the same system, It sounds like a revenue inspection in the making

Within self assessment theres no problem in evening out years, ie taking a large profit from one year and balancing it into a not so profitable year to avoid huge spikes in tax, As long as you can justify the reasoning and your not doing it to deliberately mislead, Its an annal discussion with my accountant....

making a loss on anything is always a bad idea and never sound business sense, when business "lose money" its normally by rolling cash money into capital investment (although reducing the threshold from 100K to 25K is really going to hit this) thus reducing the tax burden...., If your paying no tax your business is heading in one direction and its even worse news than the tax man.....

 

[CompoSimmonite]

Surely initial start up costs (welder, grinder, compressor miscellaneous tools etc.) would mean it would be a long time before you paid any extra tax. The revenue don't expect instant profit, they just want blood when you do make a bit
Who here doesn't spend more than the make from outside work when they first start?

N

Start up expenses aren't allowable against income. Things like equipment are sellable if the business ceases so you are given a deperication amount called "Capital Allowance". Also you can't just buy everything in the Snap-On catalogue and expect that to be offset agains income. It has to be applicable to your "trade" and then strictly a replacement for a broken / stolen / lost item unless it's a specialist tool. Quite a complicated proceedure in excluding items so unless you take the mickey then they normally are allowed without detailed inspection but be warned that it can come back to haunt you in the future if you massage the truth about expenditure.

My advise is "go for it" but make sure you keep detailed records and declare everything to cover yourself as penalties are high enough to make you cry if caught trying to beat the system.

Paul H

 

[rtbcomp]

Check the current regulations regarding startup capital costs - sometimes you are allowed 100% under special schemes to help new businesses. The last government had such a scheme for the purchase of computer equipment.

You are allowed 100% on small items, such as stationary, hand-tools and advertising. I regarded stuff over £10 as capital, below that as expenses.

 

[neilarmo]

Start up expenses aren't allowable against income. Things like equipment are sellable if the business ceases so you are given a deperication amount called "Capital Allowance". Also you can't just buy everything in the Snap-On catalogue and expect that to be offset agains income. It has to be applicable to your "trade" and then strictly a replacement for a broken / stolen / lost item unless it's a specialist tool. Quite a complicated proceedure in excluding items so unless you take the mickey then they normally are allowed without detailed inspection but be warned that it can come back to haunt you in the future if you massage the truth about expenditure.

My advise is "go for it" but make sure you keep detailed records and declare everything to cover yourself as penalties are high enough to make you cry if caught trying to beat the system.

Paul H

Capital expenditure is 100% allowable against tax at the moment, up to a higher limit than most here will need to start up. Machinery annual investment allowance is £100k this year, reducing to £25k next year!
Even if this allowance goes, expenditure is still allowable against tax as depreciation kicks in at a %age a year.

 

[rtbcomp]

I depreciate my capital at 25% pa. Thus something costing £100 attracts tax relief on £25 for the first year.

Its value then becomes £75 for year 2, the tax relief being 25% of £75 (ie £18.75) and so it goes on until its value is 0 (or as near as dammit!).

If you sell or write off an item there may be a tax adjustment to be made.

 

[Andy from Workshopshed]

I've started recording anything I spend on my hobby so that if anyone asks I can demonstrate that it's a loss making hobby and not a business. The definition of what is a hobby is a little more complex than that, here's some notes I've previously written http://fleacircusdir.livejournal.com/4565.html

I just read this week that poor old Fred Dibnah was presented a tax bill for "payment in kind" when the HMRC watched his videos and saw all the things people had given him in return for jobs.

 

[tigler]

Yeah, unwise to become famous if you operate in the underground economy !!
Also, little tip, be very careful about stuff shown or said on facebook, photobucket, forums etc, all spied upon by you know who !