Sole Trader/Tax question.....

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As I am starting to earn a little bit of money from honey sales and it would be a source of income likely to exceed £1k this year, I was going to set myself up as a sole trader and declare income and expenses (which are numerous.......!).
I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?

What is the best way to set myself up?

I took early retirement a few years ago and al drawing a private pension so this would be additional income.....

I have all my invoices for the last few years (scary) and records of honey sales made.
I am unlikely to make much of a profit for a few years but the idea of claiming back some VAT appeals.....

Any advice welcome.
 

wightbees

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JimBee463

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As I am starting to earn a little bit of money from honey sales and it would be a source of income likely to exceed £1k this year, I was going to set myself up as a sole trader and declare income and expenses (which are numerous.......!).
I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?

What is the best way to set myself up?

I took early retirement a few years ago and al drawing a private pension so this would be additional income.....

I have all my invoices for the last few years (scary) and records of honey sales made.
I am unlikely to make much of a profit for a few years but the idea of claiming back some VAT appeals.....

Any advice welcome.

Whilst it may seem appealing to claim back VAT it will cost in the long run (unless you are willing to do the returns yourself) as an accountant will charge more to process VAT accounts, due to it being more complex that simple Self-Assessment. I run a small business with a modest turnover and have been advised not to VAT register until I get near the threshold.

If you aren't VAT registered then your accounts will be simple profit and loss. I use a really simple spreadsheet showing sales income, cost of sales (i.e. raw product) and expenses (i.e. postage, machinery etc), which has served me well.

Good luck with it, whatever you choose to do.
 

jenkinsbrynmair

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I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?
If it was 'exempt' you wouldn't be allowed to register but Zero rated means it's taxable (but at the moment the rate is 0% - but it could change in future) so yes you are eligible to VAT registration, but even as a voluntary trader turning over less than the mandatory amount they wouldn't let you register for just a couple of K turnover P.A.
 

WoodenBeam

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I’m registered for Vat & would do the same again. Keep basic accounts & a friendly accountant files my year end partnership accounts. Digital tax re Vat has added a complication but nothing too strenuous and can be dealt with.
 
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Blimey! Thank you - that was a scarily long thread!
 

pargyle

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Blimey! Thank you - that was a scarily long thread!
Yes ... remember it ... lots of useful advice and perspective ... some of the pain of Inland Revenue and VAT inspections never goes away .... it should not be like that but the reality is that they work on targets and easy targets are SME's .....there's usually something they can find to beat you with and unlike the big corporations you won't have lawyers and accountants on the payroll .... it's easier to give in and cheaper than fighting it.

Cyincal and tarnished by experience ?.. who me ? Not half !
 

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As I am starting to earn a little bit of money from honey sales and it would be a source of income likely to exceed £1k this year, I was going to set myself up as a sole trader and declare income and expenses (which are numerous.......!).
I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?

What is the best way to set myself up?

I took early retirement a few years ago and al drawing a private pension so this would be additional income.....

I have all my invoices for the last few years (scary) and records of honey sales made.
I am unlikely to make much of a profit for a few years but the idea of claiming back some VAT appeals.....

Any advice welcome.
To be 'honest' I would not be declaring anything.
The amount of pain and grief you may encounter when dealing with the revenue robots will make you wish you had not bothered.
Stringing you along is their bread and butter.
 
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To be 'honest' I would not be declaring anything.
The amount of pain and grief you may encounter when dealing with the revenue robots will make you wish you had not bothered.
Stringing you along is their bread and butter.

Certainly if we are talking about an income which is just a bit over the allowance, I wouldn't be rushing to declare it. I don't think there's much chance of HMRC catching anyone selling nucs or honey.
 
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As I am starting to earn a little bit of money from honey sales and it would be a source of income likely to exceed £1k this year, I was going to set myself up as a sole trader and declare income and expenses (which are numerous.......!).
I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?

What is the best way to set myself up?

I took early retirement a few years ago and al drawing a private pension so this would be additional income.....

I have all my invoices for the last few years (scary) and records of honey sales made.
I am unlikely to make much of a profit for a few years but the idea of claiming back some VAT appeals.....

Any advice welcome.

Is that £1K turnover, that is the amount you make from your sales, or profit, that is the amount you make after you've taken off all your expenses including a wage for yourself. I am not an accountant, but there's an old saying "Turnover for vanity, profit for sanity".

To put that in context you as a sole trader will be taxed on the profit of your enterprise and only after you've exceeded the current tax free income which this year is I believe £12,500 will you pay any tax. Sorry if that's all covered in the thread referenced earlier.

I fell into the "oh it would be nice to claim back the VAT trap" a few years ago, my advice would be to avoid it like the plague, unless you really want to be an unpaid employee of the revenue collecting tax (vat) for them.

You 'should' be able to get a short consultation with an accountant if you're really certain you wish to still go ahead. You might also need to mention it to your financial / pensions adviser and see what they think.
 

jenkinsbrynmair

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To put that in context you as a sole trader will be taxed on the profit of your enterprise
may be so, but the registration/declearation thresholds apply to total turnover not profits.
 

pargyle

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"HMRC introduced a tax free allowance to cover “self-starters” with small, hobby-based businesses. The trading allowance means that the first £1,000 you earn (gross, before expenses) is tax free. You don't have to pay anything on this income or even report it. "

There's not a lot of ambiguity there ... it's £1000 of sales... I personally think it's wrong ... you only EARN from profit so it's a bit unfair insomuch as the costs of keeping bees in so many ways are quite high. I wonder if it has ever been challenged .... or indeed, whether the IR would bother investigating a hobby beekeeper with a few hives ?
 

polymath

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As I am starting to earn a little bit of money from honey sales and it would be a source of income likely to exceed £1k this year, I was going to set myself up as a sole trader and declare income and expenses (which are numerous.......!).
I was also advised by another beek to register for VAT to claim this back on items purchased.

Is this allowed as honey is zero rated?

What is the best way to set myself up?

I took early retirement a few years ago and al drawing a private pension so this would be additional income.....

I have all my invoices for the last few years (scary) and records of honey sales made.
I am unlikely to make much of a profit for a few years but the idea of claiming back some VAT appeals.....

Any advice welcome.
Here are two articles i wrote for Bee Craft, the original versions were updated by me last year but not published so i have attached them here.
 

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  • Should I make my beekeeping a Limited Business.pdf
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  • Do I have to declare my honey sales to HMRC for Tax 2021 update.pdf
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Newbeeneil

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Here are two articles i wrote for Bee Craft, the original versions were updated by me last year but not published so i have attached them here.
Nicely written and very explicit polymath,
Maybe these articles could be incorporated as "stickies"?
 
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Lots of very useful advice thank you everyone.
I’ve got a deal to sell honey in our local cafe so was also concerned that as it was more visible, someone might decide to investigate….
 
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unless you really want to be an unpaid employee of the revenue collecting tax (vat) for them.
But if the OP is only selling honey or predominantly honey based items (eg honey and dipper) then that's 0% as previously mentioned - candles or a dipper on it's own for instance, would incur the standard vat rate, so yes in that case you will be collecting for free...
 

Dodge

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Here are two articles i wrote for Bee Craft, the original versions were updated by me last year but not published so i have attached them here.

I have come across this help before but it always seems to not cover the average person as it seems to aways explain it from the perspective of a business owner / self employed already.

What would be useful is how or what to do if.

You are employed and paid through payee. Income is below tax free allowance, upto 25k or £60k. Sell £1500 of Honey of which most is through a card machine to freinds and colleagues. What do you need to do if you want to comply with the law.

I understand Black Mountain Honey has a day job like most of us, how does he go about things.
 

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