Beekeeping finances - bank/savings account?

[DontWorryBeeHappy]

If you are making a profit you are doing better than me, my better half doesn't know the half of what I spend on beekeeping gear let alone how much honey I sell!
If she did she would be out on a shopping trip for new clothes as revenge!

I know I have only been beekeeping for three years, I am inexperienced and have lots to learn. So oh wise guru's of the forum, can someone enlighten me as to how I can make a profit from my hobby of beekeeping?
(When you do I will happily buy a tin in which to put my income and tell HMRC)

 

[MandF]

.
If you really count what beekeeping gives as a profit, you propably need over 10 or 20 hives that you get your own back.

i hope that you get gasoline to car with honey money when you go to bye beekeeping stuff.

.

Exactly, the money isnt profit, it is simply cash income from honey sales!

 

[Tdod]

It is a hobby. You are allowed to generate income from a hobby, and it not be liable for income tax.


I think you will find income is taxable does not matter where the income comes from....

 

[victor meldrew]

I would think the crux of the matter to be "profit' being taxable?
,
As regards the inland revenue ,I recall reading somewhere that the tipping point between tax collection of and cost of doing so was ' forty hives '
I have kept bees for over twenty years, never more than six hives and hand on heart !never shown a profit! Yes I've sold honey, made candles but given them to relatives/friends.
If I were to diligently record all outgoings, transportation, equipment , society dues, education ,rent in the form of honey and energy costs (extraction , heating, wax rendering ) I know I'd be in for a shock!
Vm

 

[Tdod]

If NO profit NO tax

 

[MandF]

It is a hobby. You are allowed to generate income from a hobby, and it not be liable for income tax.

I think you will find income is taxable does not matter where the income comes from....

I think you need to check the HMRC website. Income from a hobby is not taxable. What matters is whether it is deemed to be a hobby (non commercial) or a business (commercial), and as Victor says, to be deemed a commercial beekeeper you need many more than 2 hives!

We have been through this before on here, but I'll post this link again here
http://www.hmrc.gov.uk/guidance/selling/examples.htm.

Example 1.

The pertinent bit being "Gail’s initial sales of cushions to friends are not classed as trading. It lacks commerciality and she does not set out to make a profit. The occasional sales are a by-product of her hobby."

From that you can clearly see that she DOES generate an income, and it is NOT taxable.

And again, for beekeepers to be deemed to be a commercial operation, I understand you need to qualify to be in the Bee Farmers Association, which has a requirement of 40 hives last time I checked.

 

[Tdod]

Gail has to pay income tax if she makes a profit

The line between hobbies and trading can be a blurred one. It is judged by several criteria known as the “badges of trade”. These include:
■Profit seeking motive
■Frequency and number of similar transactions
■Nature of the asset being sold
■Length of ownership of that asset
■Reason for the acquisition/sale of the asset
■Connection with an existing trade
■Advertising

Just one of these badges may be enough to show trading, but more usually a combination is considered. HMRC are most concerned with profit seeking motive as if there is no profit there's nothing to tax. Such a motive will arise when you seek to do more than simply cover the cost of your materials.

 

[Little John]

Gail has to pay income tax if she makes a profit

That is true - but in other years she may have made a loss - so overall, no tax to be paid ....

BUT

as I see it that's the worst of all possible worlds, as a person could then be called upon to keep and present accounts - even the 'back of a ***-packet' type. And who wants to be held accountable in regard to what should be a pleasant and enjoyable hobby ?

LJ

 

[MandF]

..and this is why hmrc have that general rule about being commercial ie doing it for a profit, and the general consensus with the economies of scale and profit/commercial motive being 40 hives.

So, there are 3 pertinent tests here;

1. Is it a commercial enterprise, are we (the hobby beekeeper) doing this to make money? Or are we doing it for the joy and challenge of keeping bees?

2. The distinct difference between income and profit. And even if you had a surplus income this season, it is entirely reasonable to point to the expenditure in previous years, or having money in the pot in case next year is the same.

3. You ARE allowed to make a PROFIT from a hobby. In the HMRC example it says "she does not set out to make a profit". That is entirely different to "she makes a profit". In other words, as long as you dont set out to make a profit, it is ok to make a profit (within reason of course).

Put it this way, my tin has £700 in it, for 3 years worth of beekeeping. Even if I had been given all my bees and equipment, there is no way HMRC would demand income tax from this. Who would consider an operation, which nets £230 "profit" a year, is in any way commercial? If they did, I would apply for the apprentice!

psafloyd seems to be doing what I was thinking about too, so I will investigate savings accounts with a debit card.

 

[Gilberdyke John]

Regardless of any income less expenses = profit derived from your activities and with due regard to interpretation of the hmrc website info, this would be considered in conjunction with all other income and personal tax allowances deducted. For many retirees it will be irrelevant.
Losses in one year may be carried forward so setting up costs, replacement, mileage costs to go for supplies, membership of professional associations, part of household costs to run an office etc etc etc are all deductible. No wonder hmrc are not concerned about a few hobbyists.

 

[Philip]

Are you in danger of confusing the definitions of a commercial activity for VAT purposes?

Income tax is paid on activity that generates income above a threshold; this is not the same area for taxation purposes.

If the income was trivial the inspector may consider the activity as trivial also, but I would not rely on that presumption. They are a special breed of person.
If they call and see you have a sign out 'honey for sale' you are advertising for sale a product, even a modest two hives could generate substantial 'income' enough for them to be interested in your activity at least.
It would then be for YOU to provide the paperwork to show conclusively that the sales did not generate a 'profit' if you do not have the paperwork then they could decide that it was all profit. Then they may start asking how many years you had been doing it!
Remember also that your record of hive numbers can be taken from such databases as the beebase and the time they have been registered. If your figures differ from the available data again it will be for YOU to prove the correctness of the information.
Food for thought perhaps?

 

[victor meldrew]

Regardless of any income less expenses = profit derived from your activities and with due regard to interpretation of the hmrc website info, this would be considered in conjunction with all other income and personal tax allowances deducted. For many retirees it will be irrelevant.
Losses in one year may be carried forward so setting up costs, replacement, mileage costs to go for supplies, membership of professional associations, part of household costs to run an office etc etc etc are all deductible. No wonder hmrc are not concerned about a few hobbyists.

Quite,
I have 6 grand in one account, last years profit was £27 after tax .
The crux being, the bank does the bookkeeping and transfers the taxes due to hmrc! Cost to hmrc zero .
Many years ago the then inland revenue had a bite at 'panel bowlers' in the district, these were men who played crown green bowls against each other at known bowling greens for money!
This money ( or very little of it ) left this group , it went round and round depending on individuals winning/ losing .
This expensive attempt at extracting tax seemed to be quietly put to one side . At least after the original buzz around panel circles ,all went silent .
Vm


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[victor meldrew]

Sorry insert "never" before the word left


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[Heather]

Separate bank account- but current not deposit.
Fairly healthy, but I buy hubby pressies from it so gets hit twice a year. Plummeted last year- so 'show me the honey'!

 

[blackcavebees]

I use a honey jar in my sock drawer, only has coppers in it and a few notes about how much it owes me! Might make some profit by 2017, weather permitting (or if i move somewhere warmer/dry)

 

[Walrus]

I just keep my receipts so that if HMRC ever took an interest I could show them a whopping loss! No need for separate account in my case. I would only do that if incorporating.


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[Haughton Honey]

I have consistently made a loss farming ever since I can remember.

 

[jenkinsbrynmair]

They are a special breed of person.

HAving been part of HMRC for a while (thanks to the one eyed scottish !diot) and having worked alongside tax inspectors there are a few words in that sentence that i take issue with:
Firstly 'person' this implies that they have a) personality b) are human c) have a soul d) are vertebrates, but i know for a fact they are all spineless individuals whose idea of fronting up to someone is sending a letter in red and by first class post - thus none of these apply
Secondly 'Breed' this again implies they are a) human (see point one) b) were a product of sexual reproduction - being of the lowest form of life they could be seen more equal to amoebae thus asexual reproduction, maybe more related to Tolkien's orcs C)have parents - although i admit that the usual phrase for these 'persons' imply they have a mother and father albeit they only met briefly and never to meet again there is doubt as to this fact see b)
I reserve 'special' to last the dictionary gives us a few meanings:
'Surpassing what is common or usual; exceptional'(NO!) 'Regarded with particular affection and admiration' (definitely not!) although maybe ' Having a limited or specific function' or maybe the American term for someone who, well, is not quite right amy apply. I find the term is too ambiguous to be included.
Thus that sentence should read 'they are a of'
Thank you!

 

[stephenpug]

we (debbie) decided last year when i started to keep bees that she would be the financial director and have all the money so on this basis i have not made a penny BUT i have to buy all the equipment jars etc out of my pocket money so i am on a lose lose situation lol

 

[jenkinsbrynmair]

SWMBO suggested that any money from honey sales should be kept in a pot to defray expenses such as autumn feeding etc. I only dip into this when there is a legitimate expense that I don't mind SWMBO knowing about (such as apiguard, sugar and reasonable amount of foundation etc) Just checked it now and it's empty as she neded money to go out to a retirement do last month and didn't have time to go to the bank! and she hasn't replaced it yet.
When she comments on the massive WBC at the top of the driveway on her arrival back from her break in Provence I shall remind her it shouldn't have cost me anything if the pot hadn't been raided!