Would this be classed as Self-Employed

SallySunshine

How would this work?

A retired man but not receiving his pension yet, only personal income is refunded tax on his savings interest. This has obviously dropped as interest rates have dropped. Wife receives 2 pensions now but previously they lived on their capital for a number of years.
As he is quite a handy chap he is thinking of starting a small cottage, or should I say garage, industry, but mainly in the winter.

However he thinks it may be more trouble than it's worth, the items he is thinking of making would pay him no more than perhaps £50 per month if he was lucky. It would be more like a hobby but obviously he would have to pay tax on this or at least declare it.
He received about £700 last year tax refund.

He would obviously be earning less than his personal allowance even with his saving interest but is probably reluctant to go self-employed as changing over years ago caused all sorts of problems.

He had a bad experience with the Tax Office some years ago, thorough investigation, lasted for months and ended up paying them about £40. He still remembers that!

i've trawled through 41 pages of this forum tonight and still no nearer really.

John_Pierpoint

How old is the "pensioner" husband. Does he have enough NI payments for a full pension?
Even if he is still liable for the weekly national insurance class 2 tax, he can opt out by applying for "small earnings" exemption.
Then it is just a matter of filling in (on-line?!) the annual self assessment tax return.
Some expenses will be claimable against the self employment income to reduce the profit from the enterprise and thus the tax payable. Some other activities may well be assisted by being charged against the business - cost of transport being the most useful.
What sort of business was he running to attract the attention of HMRC - perhaps he failed the "enough profit to live on" test?

SallySunshine

Thanks for the reply John.

He has enough N.I. contibutions for a full pension. moving house, doing it up over a number of years, receiving inheritance etc, having a couple of buy to let properties then selling, them seemed to draw the attention of HMRC even though he had an accountant and everything was above board.

Months of anxiety years ago, all for nothing really shook him up.
Since his circumstances will 'change again' if he goes self-employed, he is rather paranoid about this.

Just looking to have a small hobby, low income with not really many outgoings, but perhaps selling on eBay?

John_Pierpoint

Probably some envious "wage slave" saw his lifestyle and "shopped" him on the theory that he must be on the fiddle, or perhaps the accountant had several dodgy local traders on his books - we will never know.

I would encourage anyone, in these times of uncertainty, to remain "economically active" and I would hope that those on the massively in deficit public payroll would be delighted to welcome another sole trader into the system, however little extra tax they raise.

Mikeyorks

SallySunshine wrote: »

It would be more like a hobby but obviously he would have to pay tax on this or at least declare it.

It doesn't really exist for earned income ....... but if a few other threads going back over the years are to be believed ...... this may be an option?

http://www.hmrc.gov.uk/incometax/non-paye-income.htm

Strictly he should register for SA. Which is easy enough (and he will get the refund quicker if he files in April!) but it is a bit of a hammer for the nut you describe. So it may be worth chatting HMRC up and seeing if they will code it out on an informal basis. Obviously it will work on estimates - whereas SA is on reality - but it's a potential option for ad hoc earnings.

SallySunshine

Thanks for the reply, however after looking (for hours!) on HMRC website also eBay forums and on here at past posts, I think I have overloaded him with info.

I suppose his bottom line is that with his small income from savings interest plus his hobby earnings he would make sure he would keep under his personal allowance so in theory what's all the fuss about.

Doesn't want to go down the self-employed route with having to keep receipts, invoices etc if he sold on eBay, so looks as if he is shelving his whole idea.

Oh well, I've done my bit and asked around for him, so can't do much more.