Where do I stand.

Spoonie_Turtle

Also, the amount someone would pay is down to that person and not me. If I were to add up hours worked @ national minimum wage plus materials, nobody would buy anything. Wood carving isn't profitable as an income. It's an artistic hobby.

It appears you are stuck on this, but NMW does not apply to self-employed people so is entirely irrelevant.  https://www.gov.uk/national-minimum-wage/who-gets-the-minimum-wage

Alternatively if UC would pay you a similar amount (or perhaps even more, depending on your circumstances) it would be infinitely simpler because you would just declare your income and expenses at the end of every assessment period, there are no restrictions at all.  Any profit under the work allowance (£335 per month if you claim help with housing costs, or £557 if you don't) would not affect UC payments, and anything above would see a reduction by 55% of your earnings.

[I typed a whole load of semantics about what counts as work for other people vs doing things as a hobby for yourself, but it was all opinion and not actually based on anything I can find for guidance so probably wouldn't have been helpful!]

The benefits system is certainly harsh in many respects but it does not prevent people from selling the fruits of their hobbies, it just asks that the income from that be declared.