Selling artwork - how to comply with HMRC rules?

ClaraSolis

Hi everyone, I hope you can help me with my questions as I am new to all this. 

As I have been on and off furlough recently, I thought I would use my time wisely and try and sell some art. I've been drawing custom family portraits since November and have sold a few (all through word of mouth on Facebook). Now am I right in thinking that I am allowed to earn £1000 under trading allowances, without having to declare this?

I have not yet made £1000, but I want to try and figure out if this is something I can continue doing or if it's not worth my time. 
I understand that once I earn more, I will have to register as self-employed and submit a self-assessment. As I only started in November, when would be the deadline for doing this self-assessment? 
How much would I expect to lose on anything I make? Is it 20% (I'm on the basic tax rate)? 
With the £1000 trading allowance, how does it work with reporting your profits? Let's say I make a total of £1500, do I then only declare the £500?

Also, what exactly will I need to keep track of? At the moment most of my sales have been in Europe, with people transferring the funds to my Euro bank account. I then transfer it to my UK account to exchange it, the rates of course differ every day. Do I use the actual value I received in my UK account when I transferred it?
I don't use invoices or anything, is that an issue? Do I just need to keep track of the date I received the payment and the value I received?

Thanks for any advice you can give me on how to get started with this!
I'd love for this to turn into a lovely little side business, but I want to check if it will be worth it or not. 

[Deleted User]

Strangely enough, my daughter has been doing the exact same thing (a hidden talent) but she is in the fortunate position where she will be exempt from tax on these earnings. 

Register as as self employed by 5th October 2021. Your first tax year is for the year to 5th April 2021 - you can complete your first return from April this year with a deadline of 31st January 2022. You will pay tax at 20% where your profits and other earnings remixing below 50000. Above that - 40%. You can claim the trading allowance of £1000 or actual expenses, not both. It cannot create a loss.

You would be very wise to use invoices. Use the conversion rate at the time of sale (happy to stand corrected here) which can be obtained on sites such as www.x-rates.com (make sure you use the hyphen ). As with any business good record keeping is paramount.

Jeremy535897

See https://www.litrg.org.uk/tax-guides/self-employment/how-do-i-register-tax-and-national-insurance
https://www.litrg.org.uk/tax-guides/self-employment

ClaraSolis

[Deleted User] said:

Strangely enough, my daughter has been doing the exact same thing (a hidden talent) but she is in the fortunate position where she will be exempt from tax on these earnings. 

Register as as self employed by 5th October 2021. Your first tax year is for the year to 5th April 2021 - you can complete your first return from April this year with a deadline of 31st January 2022. You will pay tax at 20% where your profits and other earnings remixing below 50000. Above that - 40%. You can claim the trading allowance of £1000 or actual expenses, not both. It cannot create a loss.

You would be very wise to use invoices. Use the conversion rate at the time of sale (happy to stand corrected here) which can be obtained on sites such as www.x-rates.com (make sure you use the hyphen ). As with any business good record keeping is paramount.

Thank you!
Ok, so if I sell something for £50, I would be expected to pay £10 of that in taxes? So I just need to keep that amount per sale separate to pay for my taxes? I currently don't have any expenses, though I do need a printer and new laptop at some point, but that would cost more than I'm earning in this side job. 

I'll look at using invoices. I hadn't done this because the sales were mostly to family and friends so far. I'll have to look into this then! As for the exchange rate, surely it would make sense to just use what the actual exchange rate is when I actually receive/transfer the money to my account? As an example, that website says 100 euro would give me £89.07 right now, but then my actual banking app says I'll get £88.68. Small differences sure, but it can add up! 

ClaraSolis

Jeremy535897 said:

See links

Thank you, I'll have a look at those!

Also, does my employer need to be aware of me having any extra earnings? I don't know if he needs any of that info when doing my P60 (or is that not done by my employer)? Sorry if all of these are stupid questions haha. 

silvercar

ClaraSolis said:

Jeremy535897 said:

See links

Thank you, I'll have a look at those!

Also, does my employer need to be aware of me having any extra earnings? I don't know if he needs any of that info when doing my P60 (or is that not done by my employer)? Sorry if all of these are stupid questions haha. 

No, there is no tax reason to let your employer know.
The only reasons to let your employer know would be if there was a clause in your contract requiring you to do so, or if your employer operated in a similar area, so there was a conflict of interest.