Registering with HMRC

The_Smithster

I'm toying with the idea of making a few items of clothes and selling them. It wouldn't be in huge quantities (I'm thinking a couple of pairs of leggings every few months) but I thought I might be able to sell them through some facebook groups and local markets. I work full time and a friend has told me I'll need to declare it to HMRC. Is this correct?

HappyMJ

Yes and no. If you're doing it to make a profit then yes you need to declare the profit. However, if you're doing it just to cover costs as in a hobby then no you don't need to worry about it. With the short comment you've made i.e one every few months then to me it just sounds like a hobby and there's no need to declare that you made zero profit.

The_Smithster

Yes, I'd say it's more a hobby. I'm not looking to do this commercially or to resign from my full time job.

Should I take in to account the time it takes to make?

For example:
A t-shirt: Material: £5
Labour: £5

If I sold the t-shirt for £10 would that be classed as £5 profit or just covering costs and therefore a hobby?!

Flyonthewall

The_Smithster wrote: »

I'm toying with the idea of making a few items of clothes and selling them. It wouldn't be in huge quantities (I'm thinking a couple of pairs of leggings every few months) but I thought I might be able to sell them through some facebook groups and local markets. I work full time and a friend has told me I'll need to declare it to HMRC. Is this correct?

Yes.

You are making items to sell, that is a business.

It doesn't matter how many you make, sell, how much you make (loss, break even or profit) or whether you prefer to call it a hobby it is still a business and should be declared to HMRC.

Flyonthewall

The_Smithster wrote: »

Yes, I'd say it's more a hobby. I'm not looking to do this commercially or to resign from my full time job.

Should I take in to account the time it takes to make?

For example:
A t-shirt: Material: £5
Labour: £5

If I sold the t-shirt for £10 would that be classed as £5 profit or just covering costs and therefore a hobby?!

It would be classed as £5 profit.

The sell price minus any costs (e.g. material costs) is the price you get for your labour. That amount is profit and it is taxable.

You can't claim something a hobby just because you feel it is due to it being in your spare time, few items and low/no profit and not declare it. The law doesn't work that way. HMRC see it as a business because you're buying/creating to sell.

jason909

It's a hobby just see how things go for 3-6 months before you start involving HMRC.

soolin

jason909 wrote: »

It's a hobby just see how things go for 3-6 months before you start involving HMRC.

You might want to read the rest of the thread before you give dodgy advice.

A hobby would be making these things and keeping them or giving them away, a business is making things to sell. OP Has clearly stated they intend selling the made goods which makes them a business.

I admit that HMRC probably have better things to do than chase small hobby sellers, but that doesn't mean it is OK to just not bothering to register. This is also a moneysaving site, not a guide to defrauding HMRC and if, as it seems, there would be very little tax to pay it seems silly to risk large fines instead.

Just register, prepare yearly y accounts taking into account all expenses which include selling fees etc (but not a wage) apply to be exempt from NI on the income and that's it. At this level, and assuming OP has one allowance left to set against this income, any tax will be minimal .

System

Yes you need to declare to HMRC, even if you don't make a profit.

Don't listen to ANYONE online who tells you to wait and see, they aren't going to be the ones paying any fines if you did get in trouble!

If you're not going to make much / any money then it will be super easy to complete a tax return. It is nowhere near as difficult as people make it sound. Just keep a list of incomings / outgoings / expenses etc and once a year you go online and fill it all out, then you get told your tax/NI etc.

If you need more specific advice you can always PM me as I'm not around on here so much these days, however, my advice is YES you need to register.