Selling crafts while on ESA

Spoonie_Turtle

HillStreetBlues said:

Personally I don't see it as a commercial enterprise, as there isn't any benefit if OP is just getting the money back he paid for the wood, so would be a hobby.
If someone was giving the OP wood and then that person sold the carvings then that would be a commercial enterprise even if the OP gained nothing.

That is an excellent point, DMG chapter 50 specifically says it must be "gainful".
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1034572/dmgch50.pdf

For UC that is defined as 'organised, developed, regular and carried on in expectation of profit'.

For Tax Credits that was 
'On a commercial basis

With a view to realising a profit

In an organised and regular manner'
(Definitions from revenuebenefits.org.uk and entitledto.co.uk - I don't have it in me to be trawling through more DWP/HMRC guidance right now when there's a good chance it'll be ignored anyway.)

This wood carving certainly doesn't meet any of those definitions.  It's ad hoc, for expenses only, and with the intention of being a calming activity not commercial.  The selling of it is literally to fund more wood, not to make profit.  (And even if it were for profit, it's not organised or developed as a business and OP is not attempting to increase their 'work'.)


Edit: though looking back at this thread and the other I see all of this and the above had been very thoroughly covered already.  It's a shame OP hasn't had face-to-face advice e.g. through CAB, as maybe that's the only way they'll believe the advice to be true.

HillStreetBlues

@Spoonie_Turtle
Thank for digging that out. I was basing on what I know about different types of business and all of them are about what you highlighted "With a view to realising a profit"
On the other issue of HMRC. If OP buys wood at £50 and then sells it at £50 and that is his aim, then HMRC doesn't have to be informed as it is only a hobby even if going over the £1000.
But if OP sells it at £50.01 then it stars to be classed as a hobby-business as there is now profit involved, even if it could be claimed back as an allowable expense so the £1000 would apply.

Spoonie_Turtle

HillStreetBlues said:

@Spoonie_Turtle
Thank for digging that out. I was basing on what I know about different types of business and all of them are about what you highlighted "With a view to realising a profit"
On the other issue of HMRC. If OP buys wood at £50 and then sells it at £50 and that is his aim, then HMRC doesn't have to be informed as it is only a hobby even if going over the £1000.
But if OP sells it at £50.01 then it stars to be classed as a hobby-business as there is now profit involved, even if it could be claimed back as an allowable expense so the £1000 would apply.

Yes indeed, that's another point it's important to make clear.

To illustrate, on eBay or any other marketplace/social media platform if you are simply selling your unwanted items, that's not a business and you don't need to register with HMRC.  If you are buying things or making them with the specific intention to sell, that's trading and you do have to register when your receipts are over £1,000.  (And to draw the parallel, in this case OP makes them for the enjoyment and selling is just a secondary consequence.)

In fact there's an HMRC scenario very relevant
https://www.gov.uk/government/publications/selling-online-and-paying-taxes/selling-online-and-paying-taxes-information-sheet#find-out-if-you-are-classified-as-a-trader-who-needs-to-pay-income-tax

"Selling home-made greeting cards

Gina works full time as a nurse, and she has an arts and crafts hobby. In her spare time, she makes greetings cards for her family and friends. People like Gina’s cards and it’s been suggested she sells them online.

At first, she sells cards at cost price, but as business is going well, she decides to increase the price of the cards.

After a few weeks Gina is making a profit. Gina is now trading as she is selling with the intention of making a profit. … "

[Although none of that negates the fact that OP still could sell for a profit as long as their earnings were below the ESA Permitted Work threshold and they register with HMRC in the following tax year if their gross income ended up over £1,000 *shrug*]

But, it's OP's decision of course.

HillStreetBlues

@Spoonie_Turtle
Brilliant research 
I do hope the OP takes notice, as would be a real pity for him to give up his hobby, or hobby-business if wanting to make a bit extra cash.

Newcad

I think that much stuff on the internet has to err on the side of caution.

Either because the answer is complicated - or often because the writer doesn't know the answer and is offering support.

Unfortunately that caution can be confusing.

sheramber

And for self-employment actual income is worked out as income minus expenses, so if you only sell at cost then you're earning nothing.

That is not correct.

Income is gross  income received before any expenses.

Income less expenses is profit.

Until the OP sells items to the value of £1000 he does not need to register as self employed. if he did sell  items to the value of £1000  he would need to register as self employed but he could  deduct £1000  trading allowance   even if his actual expenses were only £500, 

This has applied since 6 April 2017.

Spoonie_Turtle

sheramber said:

And for self-employment actual income is worked out as income minus expenses, so if you only sell at cost then you're earning nothing.

That is not correct.

Income is gross  income received before any expenses.

Income less expenses is profit.

Until the OP sells items to the value of £1000 he does not need to register as self employed. if he did sell  items to the value of £1000  he would need to register as self employed but he could  deduct £1000  trading allowance   even if his actual expenses were only £500, 

This has applied since 6 April 2017.

I meant for ESA - although I am less familiar with that than with UC so welcome any correction there - but evidently the context of DWP and Permitted Work still wasn't quite clear enough.

(For HMRC I did try to make clear it was total income not profit, but apologies if I failed there.)

Auti

I am following this with interest but have a related point/question - I have a therapeutic hobby and on CBESA and sort off got conflicting advice and non understandable forms to fill in if I did sell something from CBESA. The stumbling block for me is that I have to get public liability insurance if I sell anything (even for 1pence) and have to tell my house insurance etc which then means I am classed as a business so then have to be treated as a business - this then stops it being a therapeutic hobby and becomes a load of stress. Without getting costs back it restricts my hobby and I end up with a room full of items that I would love to be used - there are only so many I can give as presents to family (I did read that even if given as gifts I should have public liability insurance so I only give to close family). 

Spoonie_Turtle

What are you making that needs public liability insurance?

Auti

Was told if I sold anything public liability insurance was needed which covered if they hurt themselves on something I made - I make tapestry crochet bags in style of Wayuu bags and chain maille bracelets - they require a lot of concentration and repetitive actions that help me. It is so I would be covered if they sued me say if their dog ate the bracelet and it cut them or hurt themselves on the shoulder strap or yarn if they chewed it. That is why I was told that I needed it and that it was required by anywhere that I used to sell.