Taxes on hobby business

Over lockdown, I have rediscovered my love for art and have began doing commissions and prints. It's been better than I anticipated, and I'm now booked up for quite a few weeks, which lead me to think about when to start paying taxes on this. I have read that an annual trading allowance of £1000 is allowed, and this does not need to be declared on a tax return, however I am already approaching £400 a few weeks in, and need to figure out what to do next.

Research tells me I should register as self-employed and do my own tax returns, however I also have a full time job which I will not be quitting, and wonder whether I can be registered as self employed when my main income is something different. How should I approach this? I'm very new to this 'running a side business' idea so any help is greatly appreciated.

Replies

  • Grumpy_chapGrumpy_chap Forumite
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    Yes, you can be self employed sole-trader and employed PAYE at the same time.
    This is simple in the tax return, you merely complete the self employment pages as well as the employment pages.  Keep records of all expenditure and income as you go to make this easier when you come to doing the tax return after next April.
    As you noted, there is a small allowance below which you don't need to declare, but it sounds like you will probably exceed this level.
    If things progress, you may wish to consider business bank account (makes it easier to keep things separate and in order) plus possibly engage an Accountant.
    One other consideration is whether your main contract of employment permits you to do other work.  If it is only a few paintings here and there and staying near the 'hobby' level, you may decide you don't need to inform them, but check your contract of employment so you know the rules.
  • soolinsoolin Forumite, Board Guide
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    This is the details of the £1000 trading allowance which is based on income before expenses, so just shy of £20 per week.

    https://forums.moneysavingexpert.com/discussion/6070793/1000-trading-allowance-is-made-clear-on-tax-return

    as above though, there is no problem at all with having a sole trader business alongside PAYE work.
    I'm the Board Guide for the Ebay Board , Charities Board , Dosh & Disability , Up Your Income and the Local MoneySaving-England board which means I volunteer to help get your forum questions answered and keep the forum running smoothly. However, do remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected] (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com
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  • thecadianthecadian Forumite
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    If your total income in the current tax year is less than £1,000 you won’t need to complete a tax return at all as all the side income is covered by the trading allowance.

    If your earnings are over £1,000 you would be able to claim a flat £1,000 of costs instead of working out your actual expenses which might help reduce any tax due 
  • soolinsoolin Forumite, Board Guide
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    thecadian said:
    If your total income in the current tax year is less than £1,000 you won’t need to complete a tax return at all as all the side income is covered by the trading allowance.

    If your earnings are over £1,000 you would be able to claim a flat £1,000 of costs instead of working out your actual expenses which might help reduce any tax due 
    See link in post above yours, the £1000 trading allowance is before any expenses and OP says a few weeks in they have already taken £400.  The allowance cannot be taken as a flat expense of £1000 against actual profits. 
    I'm the Board Guide for the Ebay Board , Charities Board , Dosh & Disability , Up Your Income and the Local MoneySaving-England board which means I volunteer to help get your forum questions answered and keep the forum running smoothly. However, do remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected] (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com
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