The Taxman

[midnight sun]

I thought we had been through all this on a previous thread. http://www.beekeepingforum.co.uk/showthread.php?t=31702&highlight=hobby. and http://www.beekeepingforum.co.uk/showthread.php?t=20645&page=11
The thread was based around 'what was a business'. The outcome was basically that if you were just selling off the surplus honey, then ok, it's a hobby.....if you REULARLY "trade" honey or buy and then sell, or have a two way street of merchandise, then it's a business and liable for tax. There seems to be a misunderstanding of what a business is. Ebay has been mentioned.
If you sell on Ebay REGULARLY then you are a business. If it is just the "odd" item of excess then it's not! The tax people are after the people who masquerade as hobbyists! If you are going to have plenty of hives so you can sell honey all year, or if say you advertise "nucs for sale" in the near future, then you are taking orders for a product and then hence it is a business!
One has to use some common sense in this. If you are really worried then keep simple accounts and when the "bogey man" comes calling show him how much he owes you!

 

[Tim1606]

I thought we had been through all this on a previous thread. The thread was based around 'what was a business'. The outcome was basically that if you were just selling off the surplus honey, then ok, it's a hobby.....if you REULARLY "trade" honey or buy and then sell, or have a two way street of merchandise, then it's a business and liable for tax. There seems to be a misunderstanding of what a business is. Ebay has been mentioned.
If you sell on Ebay REGULARLY then you are a business. If it is just the "odd" item of excess then it's not! The tax people are after the people who masquerade as hobbyists! If you are going to have plenty of hives so you can sell honey all year, or if say you advertise "nucs for sale" in the near future, then you are taking orders for a product and then hence it is a business!
One has to use some common sense in this. If you are really worried then keep simple accounts and when the "bogey man" comes calling show him how much he owes you!

If getting rid of surplus honey to family and friends, then yes i would class that as a hobby, but as soon as you start selling to other business or at farmers markets, you are trading and therefore are a business, no matter the quantity. Even if it is only 10 jars of surplus to a shop it is trading and so should be declared.

 

[midnight sun]

If getting rid of surplus honey to family and friends, then yes i would class that as a hobby, but as soon as you start selling to other business or at farmers markets, you are trading and therefore are a business, no matter the quantity. Even if it is only 10 jars of surplus to a shop it is trading and so should be declared.

I agree, I never mentioned "other business's" or "farmers markets"......That would come under the same area as "regular selling on Ebay".
I thought I made my point clear and simple. It seems that the real problem is some people cannot distinguish between the two concepts. Lets hope the tax man is not one of the forum members who 'doesn't get it'!

 

[Tim1606]

I agree, I never mentioned "other business's" or "farmers markets"......That would come under the same area as "regular selling on Ebay".
I thought I made my point clear and simple. It seems that the real problem is some people cannot distinguish between the two concepts. Lets hope the tax man is not one of the forum members who 'doesn't get it'!

It doesn't matter where you are selling, trading is trading and therefore a business.

 

[jenkinsbrynmair]

i have been told unless a registared business can't claim for new equipment etc so everything sold as to be declared i might have to just leave it on the hives or tip it away

I hate to see honey wasted and since the tax laws in your head seem to be a tad different to the ones I had pushed down my throat in that dark period of my life when I was forced to acknowledge I worked for HMRC (didn't mind so much when I worked VAT for HMCE)
I'm always ready to help a fellow beekeeper so you can send all your 'surplus' honey to me and I'll sort it out - being a nice chap I'll even pay half the postage

 

[Thymallus]

For what it's worth I was self employed for several years and when I first started keeping bees I wanted to offset the start up costs. Several conversations with that nice (it was then) HMRC helpline told me that it was considered a hobby and as such was not considered an income stream until I hit 30 hives. So I could not offset my set up costs against my tax returns. I asked about money from honey sales to which they told me this was not a taxable income as it was quite small and I was unlikely to make a significant profit. I figured they had realised that initially they would lose a lot of tax with offset start up costs.
I could not get any definite figures from them about upper or lower limits on amounts from sales, just this 30 hive limit.
Now this was several years ago and things may have changed a little. So it is worthwhile phoning them to check how it applies to you.

So please, don't take this as gospel as their viewpoint may have changed since then.

However, if you are selling honey as a business register for VAT ASAP, it gets you back the 20% on all equipment outlay. We also run a small preserves business selling a 0% VAT rated product, it saves us thousands.

 

[wessexmario]

knowing that HMRC use 'number of hives' as one of their indicators is useful to know, would be useful if anyone could confirm if 30 is still the number they use.

 

[Thymallus]

The simple answer is to ring them up and see if they are still applying the same criteria, but as they will want your NIS number before talking to you, it may put you on their "radar".
But better to know the answer than all this current speculation.
And accountants don't know the all the answers. We sacked ours after he continually insisted we couldn't register for VAT...... (Okay this wasn't the honey business....but it makes no difference). Currently I'm considering setting up the beekeeping as a sole trader, register for VAT (back dateable for 4 years) to offset the 20% VAT on equipment.

 

[B+.]

But better to know the answer than all this current speculation.
And accountants don't know the all the answers. We sacked ours after he continually insisted we couldn't register for VAT...... (Okay this wasn't the honey business....but it makes no difference). Currently I'm considering setting up the beekeeping as a sole trader, register for VAT (back dateable for 4 years) to offset the 20% VAT on equipment.

The threshold for COMPULSORY VAT registration is currently £81,000 in a 12 month period (https://www.gov.uk/vat-registration/when-to-register) but you can register voluntarily.

 

[B+.]

My accountant said much the same, mainly about e bay.

beware: the phrase used when calculating income tax is "income from all sources"

 

[jenkinsbrynmair]

The simple answer is to ring them up and see if they are still applying the same criteria, but as they will want your NIS number before talking to you,

Simples - give them someone else's

And accountants don't know the all the answers. We sacked ours after he continually insisted we couldn't register for VAT.

I worked as the VAT registration officer for Bristol many moons ago, had to deal with hundreds of accountants (don't panic - as with solicitors, I did wear gloves) the one thing I can say they all had in common - they may know how to hide money, but to a man, they didn't have a scooby about VAT registration! I can honestly say that a builder who (by his own admission) struggled to work out the price of a round make a much better job of registering his own business than the accountant thst he sacked. can't see much changing there!

 

[Hivemaker.]

beware: the phrase used when calculating income tax is "income from all sources"

That's what it is for sure.

 

[Arfermo]

Don't forget you also pay NI as well at what ever rate that is now 12% up to £805 per week then 2% above that. so that would work out at 57% tax at that highest rate. in my mind sod working for that.

Nice for you to be earning that much!!!!! I'm clearly a pauper in comparison.

 

[Madge]

knowing that HMRC use 'number of hives' as one of their indicators is useful to know, would be useful if anyone could confirm if 30 is still the number they use.

How are they going to check whether you have 30 hives (or rather, colonies)?

 

[midnight sun]

It doesn't matter where you are selling, trading is trading and therefore a business.

If you say so.....I've run a business for the last 21 years and have a "hobby" that is unrelated, that sometimes may bring in a couple of quid. (kind of a clue there for some) The tax man I spoke to disagrees with you, but, Hey, what will he know!

 

[dpearce4]

Nice for you to be earning that much!!!!! I'm clearly a pauper in comparison.

LOL I wish I were to. I got that figure from the .gov website to put on here. just didn't want people to forget that NI doesn't stop when you do overtime.

 

[dpearce4]

If you say so.....I've run a business for the last 21 years and have a "hobby" that is unrelated, that sometimes may bring in a couple of quid. (kind of a clue there for some) The tax man I spoke to disagrees with you, but, Hey, what will he know!

deferent tax inspectors may come up with different ideas. same as EHOs

 

[drstitson]

"It doesn't matter where you are selling, trading is trading and therefore a business"

that's not what the examples given on HMRC website suggest.

trading = buying stock and selling for a profit.

selling off odds and ends or direct by-products of a hobby do not count.

 

[Arfermo]

If you say so.....I've run a business for the last 21 years and have a "hobby" that is unrelated, that sometimes may bring in a couple of quid. (kind of a clue there for some) The tax man I spoke to disagrees with you, but, Hey, what will he know!

Love it!!! Your tax man must be a beek too and will be as keen as anybody to avoid tax that ain't due?

 

[midnight sun]

Love it!!! Your tax man must be a beek too and will be as keen as anybody to avoid tax that ain't due?

That's a possibility!

http://www.hmrc.gov.uk/guidance/selling/examples.htm

This shortcut may help some of the posters 'put things in order' as it gives examples. (Although I won't hold my breath! LOL