Beekeeping finances - bank/savings account?

[MandF]

Who was talking about having a business account?

That would be madness - paying monthly fees for zero interest!

 

[psafloyd]

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....

See these examples from HMRC.

Beekeeping seems to sit within example 1 and it will depend upon how one engages in the selling of their honey.

 

[MandF]

See these examples from HMRC.

Beekeeping seems to sit within example 1 and it will depend upon how one engages in the selling of their honey.

Yes, and I think a more general test is to answer the question "Why do you keep bees".

If the answer is to farm and sell their honey, the bees are just a means to an end, it is not a hobby. Or indeed if it was to hire hives out to farmers.

Thats not why I keep bees. If I wanted to just sell honey I could buy it bulk and then jar and sell for proper profit, and not have all the hassles, costs and risks with actually keeping bees.

 

[pargyle]

See these examples from HMRC.

Beekeeping seems to sit within example 1 and it will depend upon how one engages in the selling of their honey.

Yes ... but 'Income' is 'Profit' ... So you would only pay income tax on the actual nett profit ... ie: You can legitimately deduct all the cost of your enterprise - feeding, frames, consumables, travel, postage etc. etc, from your sales value and would only be responsible for paying tax on the 'Income'.

I doubt that there are many small operation beekeepers, who appear to fall into the 'commercial enterprise' category, that would actually make any significant profit once the real costs of their beekeeping are taken into account.

However, common sense would suggest that, if you feel that you are verging on the 'commercial enterprise' situation then you should start keeping personal records of both sales and costs - with supporting documents. If the IR feel that you are involved in an enterprise that is making profit and you are not declaring the income then you could find yourself on the receivng end of an IR inspection ... Believe me - you don't want to go there. If in doubt KEEP RECORDS.

 

[RogueDrone]

For my two penneth, on this I have kept a double entry book on my beekeeping and kept most receipts unfortunatly the balance figure never comes out of the brackets, i.e. always negative. The negative figure could have paid for a nice car or a few holidays abroad, bee finance book now hidden from SWMBO.

 

[Merlin]

I read that too, that you could join with 20 hives, but you had to have the 40 within a certain (short) time period.

I just tried to find where I read it, but cannot - maybe an existing member on here can confirm that the requirement to be a member is still 40 hives but that you can join with an initial 20 hives as long as you are expanding to 40?

BFA Associate membership is available to owners of 20 hives but with a commitment to get to 40 hives within 2 years. At that point full membership becomes available.

As a Chartered Accountant I would love HMRC to have a go and see if they could squeeze tax out of my beekeeping activities. The losses I could demonstrate and the claim to offset against other earned income with an arrears claim would have then scuttling for cover pretty sharpish. HMRC will however bully if there are no records, I keep a record of the quantity of honey jarred to keep tabs on the batch data put on the jars, this has the effect of providing a record of the volume of product sold which the Revenue would have difficulty challenging.

I then keep most of the purchases to debit or credit cards and keep the statements and receipts for the necessary 6 years. This nicely collates the expenses. The losses would be eye watering !!

Remember it is profit only they can assess for tax and most hobbyist beekeepers would get no where close. But do keep some basic records of sales as if you have no answer if challenged you can expect farcical estimates based on average yields and number of colonies that they will then ask you to disprove. And of course they will not appreciate that, of whatever number of colonies you may have, they do not all perform in the same way. We all have our dodgers every year.

Just keep a simple "jarring" record and that should serve well to deflect any opening challenge.

 

[MandF]

Yeah, I have an xls with my honey batch information, which I thought was needed anyway. But anyhow, I know exactly how much honey my hives have produced, and how much of that I have sold.

I havent kept receipts for my equipment - a fair bit is bought from the local association, who do keep records, and a lot will be on old cc statements.

But as you say, when they realise just how variable (ie usually low!) honey yields are, it wouldnt take more than a few minutes to get into the red.

It would be useful to know if HMRC *do* refer to industry standards for commercialism, when deciding whether to inspect a beekeeper, or someone who keeps chickens etc, or not. If there are industry definitions, it would make a nice easy shortcut for them, so they can properly target the right individuals.

 

[pargyle]

It would be useful to know if HMRC *do* refer to industry standards for commercialism, when deciding whether to inspect a beekeeper, or someone who keeps chickens etc, or not. If there are industry definitions, it would make a nice easy shortcut for them, so they can properly target the right individuals.

They used to use 'industry standard graphs' in the days before computer programmes ... they look at your declared turnover and associated profits (say you ran a fish and chip shop) and then, if the profit figures fell outside reasonable parameters of what their standard model for a fish and chip shop was - you got an inspection ! They tended to look more closely at 'cash' businesses like fast food, hairdressers, market traders etc. as there were more opportunities for 'fiddles' (in their estimation). I understand that these days the 'models' are all computer driven and they just get a list that falls out of the computer of businesses that they should inspect.

The risk these days is that there are so few inspectors that they tend to look for leads ... ie: people reporting their fellow man for tax avoidance - and follow those up.... and they really want to make examples of people that they catch - and the easier targets are usually the small business who can't afford to time and expense of going through a full IR investigation. A lot of businesses these days actually INSURE against the eventuality of being investigated by the IR !

 

[drstitson]

Interesting to see how Italy is approaching getting on top of tax evasion.

18 months ago the prescription system was changed. In order to get exemption/reductions households had to complete auto-declaration forms of household income. Some thing like 5 million households declared ZERO income.

The government introduced SERPICO a couple of years back - a computer system that extracts details of all italian bank accounts.

Two months back the REDDITOMETRO was introduced - a model based on household types in the various regions. Anyone declaring an income significantly below that expected for their lifestyle will be investigated (i think that is why pope benedict quit - didn't feel up to taking responsibility for the vatican household tax bill!!!!!).

re HMRC - aside from whether or not honey sales are minor by-product of hobby or a commercial product, it is the responsibility of the individual to declare any untaxed income. IMHO, and as mentioned by others above, most uk amateur beeks will not be in profit even if trying to run a cottage industry!!!!!

based on the HMRC cited examples - i personally would interpret the buying of consumables (ie jars and labels) specifically for retail sale as being a commercial activity.

 

[MandF]

So, if that is the case, and they need to go for low hanging apples, would any of them bother to inspect an individual (not a business) who has a few beehives because they saw their honey for sale in a local butchers or something?

Even if the beekeeper was reported, and the inspector didnt know much about beekeeping, a quick look on their systems could identify the parameters above which it is worth inspecting, and those parameters would be along the lines of the commercial beekeeper definition?

Basically what I am saying is that, given their resources, they are better served going for those cash businesses (or reports of an individual doing such work) where they a more likely to get a result for their efforts.

There are plenty of people on ebay earning money from their "hobby", with vastly higher annual turnovers than someone could hope for with 5 hives, even before costs are considered.

I know if I were a tax inspector, I would be scouring ebay traders for likely candidates, and inspecting those would be a full time (and lucrative) job!

 

[Merlin]

I have been at this game for 25 years and in that time I have not heard of a beekeeper being investigated by HMRC.

Must go - a strange man knocking at the door !!!!

 

[pargyle]

I have been at this game for 25 years and in that time I have not heard of a beekeeper being investigated by HMRC.

Must go - a strange man knocking at the door !!!!

If the last few years are anything to go by their computer model probably throws up anyone who has only made a small loss !!!

 

[steve1958]

I used to keep my Honey Money in a 1lb Honey Jar
Until one of my Foster children nicked it (little love !!! )
Now its locked in a tin box, though if I lose the key I am in trouble.

I keep the money as evidence, so that I can show my wife when ever she asks "How much is this lot costing".

 

[MandF]

I used to keep my Honey Money in a 1lb Honey Jar
Until one of my Foster children nicked it (little love !!! )
Now its locked in a tin box, though if I lose the key I am in trouble.

I keep the money as evidence, so that I can show my wife when ever she asks "How much is this lot costing".

Good idea. Almost certainly worth more than any savings interest

 

[madasafish]

I don't keep any records for my beekeeping. The income is relatively small (just 3 figures) and the costs are very similar.. And I'm of Scottish heritage..