Sole trader, Limited Company or what?

[drdrday]

I always thought that this forum was about beekeeping, not business. I keep bees because I like to do so, not to make money!

This forum IS about beekeeping, and it's such a great resource BECAUSE it covers every aspect of beekeeping and brings together ALL of us, from hobby keepers with just one or two hives, right up to the real bee farmers with thousands. For me, it's great as a hobbyist to be able to read advice or speak so readily with someone else that can make a living from bees!

 

[jenkinsbrynmair]

I always thought that this forum was about beekeeping, not business. I keep bees because I like to do so, not to make money!

If you keep bees properly, they make Honey, if you're a good beekeeper, they make more honey, honey=money, there's no getting away from that fact.

 

[Mint Bee]

Can anyone clarify? My understanding that the HMRC £1000 hobbyist allowance was for income, not profit.
Could offset a lot of expense against total income to reduce profit (or make a loss) but I think this is outside of the hobbyist scheme? Thanks

 

[B+.]

Can anyone clarify? My understanding that the HMRC £1000 hobbyist allowance was for income, not profit.
Could offset a lot of expense against total income to reduce profit (or make a loss) but I think this is outside of the hobbyist scheme? Thanks

HMRC don't like anything to do with profit because it is so easily manipulated (e.g. using high depreciation rates)

 

[ics19]

Could offset a lot of expense against total income to reduce profit (or make a loss) but I think this is outside of the hobbyist scheme?

Yes, that's right - you can do one scheme or the other - not a combination , i.e actual expenses or the set trading allowance, see:
Tax-free allowances on property and trading income

 

[madasafish]

Can anyone clarify? My understanding that the HMRC £1000 hobbyist allowance was for income, not profit.
Could offset a lot of expense against total income to reduce profit (or make a loss) but I think this is outside of the hobbyist scheme? Thanks

Yes Income.

Be aware that investment in buildings/hives/extractors is capital equipment and hence you cannot offset all the cost at once against income . If you decide to go down the expense route, you really need advice from an accountant who is competent . And if your total beekeeping income is less than £2k it is not worth the effort.

Put crudely your gross profit less expenses on a yearly basis will be roughly 60% so on a £2k revenue you will have taxable income of £1200- not too different from £2k -£1k allowance (£1,000 for those who "don't do sums" )

 

[ics19]

The benefit to HMRC is minimal

Yes, it's not going to be in the same league as Jimmy Carr but still a potential £200 (or £400 at the higher rate) on that £1000 once you're above the personal allowance

 

[B+.]

Yes, it's not going to be in the same league as Jimmy Carr but still a potential £200 (or £400 at the higher rate) on that £1000 once you're above the personal allowance

That's a bizarre case. If tax avoidance is "morally wrong", why do so many HNW individuals do it? The answer is obvious:
a) it is legal
b) it makes sense to structure your income in such a way that you pay the least tax if you have that option.
c) it would be crazy to pay more tax than you have to

The Times article is a communist argument (from each according to his ability, to each according to their need) but this is a spurious argument because the proceeds of tax do not go to those in need. They line government coffers and are used for vanity projects and "elite" privilege.

This is way off-topic now so I'll say no more.

 

[Apple]

They line government coffers and are used for vanity projects and "elite" privilege

But you can offset tax by giving huge amounts to "Charities".... and get a knighthood in the process!!! ... Shirley????

 

[madasafish]

They line government coffers and are used for vanity projects and "elite" privilege

But you can offset tax by giving huge amounts to "Charities".... and get a knighthood in the process!!! ... Shirley????

How do you know that I don't have a knighthood? I may be too modest to use it?

 

[Repwoc]

sometimes threads branch out to some esoteric subjects but .. you can just mark them as read

How do you do that?

 

[WoodenBeam]

Yes Income.

Be aware that investment in buildings/hives/extractors is capital equipment and hence you cannot offset all the cost at once against income . If you decide to go down the expense route, you really need advice from an accountant who is competent . And if your total beekeeping income is less than £2k it is not worth the effort.

Put crudely your gross profit less expenses on a yearly basis will be roughly 60% so on a £2k revenue you will have taxable income of £1200- not too different from £2k -£1k allowance (£1,000 for those who "don't do sums" )

Can you not deduct your all your equipment costs before tax using an annual investment allowance?

 

[pargyle]

How do you do that?

Well ... I can't find how you do it ... I was sure I'd done it in the past but perhaps it was a function on the old forum ?

 

[ericbeaumont]

I always thought that this forum was about beekeeping, not business. I keep bees because I like to do so, not to make money!

I too keep bees because I like to do so (just got carried away) but once you reach Jimmy's limit (post 38) you are in business whether you like it or not.

When you cross that line it would be a great help if you were to support those of us who do sell honey to pay some or all of the bills, by selling yours in a business-like way.

Main point is to forget the idea that you must compete with supermarket prices and offload your honey cheaply in big jars; this route will only devalue all local honey and do none of us any favours.

If you don't want the faff of selling and marketing, contact a bigger player local to you and sell it on; at least it'll hit the right market at a modern price.

 

[madasafish]

Can you not deduct your all your equipment costs before tax using an annual investment allowance?

Perhaps but you would need competent advice (I am not!)

 

[Niv]

@colinlyne - From my below post, maybe you will understand how even a small hobbyist needs to understand the tax implications!

This thread has turned into a very useful one for me. As I am such small fry I hadn't considered that I was near to having to pay tax. I took honey off mainly two hives last year and netted a gross income a little under £1000. That's just from two hives in what many report as a bad year! I have not even started looking at selling wax / wax related products which would obviously bring in a little more.

I have 5 hives going into this year so can cautiously expect to double my gross income this year - that will put me into tax paying territory.

So, to my question - do I have to now set up as a sole trader or ltd company or can I just fill in a Self Assessment form and pay what's due or does that amount to the same thing as being a sole trader?

Also, if I need to set up as a sole trader has anyone got a link to a useful resource page for such things as I don't want to get tax type things wrong and where do I go to register as a sole trader?

Sorry for the daft questions, I am just a PAYE employee that has got a 'successful' hobby.

 

[Boston Bees]

@colinlyne - From my below post, maybe you will understand how even a small hobbyist needs to understand the tax implications!

This thread has turned into a very useful one for me. As I am such small fry I hadn't considered that I was near to having to pay tax. I took honey off mainly two hives last year and netted a gross income a little under £1000. That's just from two hives in what many report as a bad year! I have not even started looking at selling wax / wax related products which would obviously bring in a little more.

I have 5 hives going into this year so can cautiously expect to double my gross income this year - that will put me into tax paying territory.

So, to my question - do I have to now set up as a sole trader or ltd company or can I just fill in a Self Assessment form and pay what's due or does that amount to the same thing as being a sole trader?

Also, if I need to set up as a sole trader has anyone got a link to a useful resource page for such things as I don't want to get tax type things wrong and where do I go to register as a sole trader?

Sorry for the daft questions, I am just a PAYE employee that has got a 'successful' hobby.

Set up as self-employed (a 'sole trader'): step by step - GOV.UK (www.gov.uk)

 

[Niv]

Set up as self-employed (a 'sole trader'): step by step - GOV.UK (www.gov.uk)

Thanks Boston. Does that mean I can be PAYE and self employed? Seems odd, but guess that's how it works?

 

[Boston Bees]

Thanks Boston. Does that mean I can be PAYE and self employed? Seems odd, but guess that's how it works?

Oh yes, you can be PAYE, and self-employed, and the director of a limited company, and a buy-to-let property landlord, all at the same time. You just fill out an extra form as part of your tax return for each one.

 

[Niv]

Oh yes, you can be PAYE, and self-employed, and the director of a limited company, and a buy-to-let property landlord, all at the same time. You just fill out an extra form as part of your tax return for each one.

Ok, thanks. I often fill in a self assessment for claiming back tax for business miles (wont be for this FY though!), so it looks like it may take me longer that normal to fill out the form !