Value added Honey products

[charlievictorbravo]

The activity level of manuka honey is scientifically proven and tested by accredited labs, there are many scientific papers on its use/properties.

Possibly. I met a beekeeper in northern New South Wales (Superbee??) last year who had land with Tea Tree bushes on it so he put some hives up there to try to get on the Manuka honey bandwagon. When the honey was finished he sent samples to three different testing houses in New Zealand. After testing, he had three completely different results from the same honey.

He was a bit bemused by this, thinking a scientific test should give consistent results from different testing houses. His conclusion - It's all smoke and mirrors!

CVB

 

[pargyle]

Well spotted, Chris. It comes into force from April 2017 as follows: Property and trading income allowances – From April 2017, the government will introduce a new £1,000 allowance for property income and a £1,000 allowance for trading income. Individuals with property income or trading income below £1,000 will no longer need to declare or pay tax on that income. Those with income above the allowance will be able to calculate their taxable profit either by deducting their expenses in the normal way or by simply deducting the relevant allowance. (Finance Bill 2017) - para 7.12 of https://www.gov.uk/government/publications/budget-2016-documents/budget-2016#contents

It's amazing what you learn on this forum!

CVB

Yes .. beat me to it. It's not a lot of profit to go for as a threshold but I suspect that it takes a lot of worry away from a very high percentage of hobby beekeepers - it would be very nice to make any profit so £1000 after paying for everything associated with your beekeeping is a nice target to aim for ... I should be so lucky !!

 

[jenkinsbrynmair]

The activity level of manuka honey is scientifically proven and tested by accredited labs, there are many scientific papers on its use/properties.

Maybe so -but most is so adulterated and 'fake' the numbers aren't worth a jot.
Had a long chat with a NZ manuka producers a few years ago - one thing they don't tell you (funnily enough) that even of the 100% dinky die genuine manookie honey only a small percentage has any of the wonderful properties they bang on about. The rest is just bog standard weird tasting honey

 

[charlievictorbravo]

Yes .. beat me to it. It's not a lot of profit to go for as a threshold but I suspect that it takes a lot of worry away from a very high percentage of hobby beekeepers - it would be very nice to make any profit so £1000 after paying for everything associated with your beekeeping is a nice target to aim for ... I should be so lucky !!

Phil,
You may recall the excellent post last year by Jack Straw that formed the basis of a "sticky" on tax and the taxman - http://www.beekeepingforum.co.uk/showthread.php?t=32799

Jack listed several "badges of trade" that might identify a beekeeper as "trading".

My question to Chrisb or Jack Straw, if he still visits the forum, or any other knowledgable individual, is "do the proposed changes on 1 April 2017 mean that the badges of trade will no longer be a decisive factor - you just pay tax on any trading surplus over £1000"?

CVB

 

[pargyle]

Phil,
You may recall the excellent post last year by Jack Straw that formed the basis of a "sticky" on tax and the taxman - http://www.beekeepingforum.co.uk/showthread.php?t=32799

Jack listed several "badges of trade" that might identify a beekeeper as "trading".

My question to Chrisb or Jack Straw, if he still visits the forum, or any other knowledgable individual, is "do the proposed changes on 1 April 2017 mean that the badges of trade will no longer be a decisive factor - you just pay tax on any trading surplus over £1000"?

CVB

yeh... it's a good yardstick of what HMRC consider trading .. but .. a £1000 profit is hardly a business ..indeed I'm not sure that £5000 could be seriously considered a business .. so I reckon that this £1000 threshold rather covers the existing loophole between hobbyist and trading beekeeper ... I also suspect that HMRC will be very grateful if any small time beekeepers declare any profit as I suspect that few actually do ... and whether it is worthwhile HMRC chasinng anyone with a small profit from their hobby is doubtful ... or for that matter financially viable.

The ones that will get chased are those extracting the urine and trying to claw back losses from beekeeping against other earned income .. the easy way forward is (and confirmed by Jack Straw in the past on a number of occasions) to keep records of your beekeeping finances and always be prepared for someone looking at you from HMRC ... the nice thing about this £1000 concession means that for any hobbyist in any way making a few quid 'on the side' can now be considered a legitimate tax free income up to £1000 a year.

AND THE TAX YEAR HAS JUST STARTED ...So a good time to get yourself a cash book or spreadsheet and start recording ...

 

[Erichalfbee]

AND THE TAX YEAR HAS JUST STARTED ...So a good time to get yourself a cash book or spreadsheet and start recording ...

THAT is a very good bit of advice

 

[chrisb]

( charlievictorbravo )
Personally I do not see this £1K P/A as a set divide between hobby and business activity even part time business. as the difference between hobby activity and business activity is determined by the way sales were conducted.

also where previous anything you earned was taxable now it means they will not bother or waste valuable man hours chasing TAX on any profit below £1k, if you take the outside TAX percentage they could claim say £270 from you however it would cost in time for them more than this to get it !
also it is like a tax amnesty for TAX dodgers you can have the first £1k but after that and you do not declare we going to hammer you.

When do you consider yourself a business ? there is no hard and fast rule and yet again it can be deferred by how you set about your actions


" Jack Straw " made a very good post about it and it is not on the number of hives you might have. you could have 100 of them and still be a hobby. if I was a millionaire and a bought 30 cars it dose not make me a car dealer ! it is all about the amount you make from what you sell and the way you go about to obtain said profit.

( pargyle ) yes keeping records is worth it if you are concerned and it is so so simple.
a basic note book left hand page in-comings ( credits ) money going out. right hand page Outgoings ( debits ) money coming in. and keep receipts

then if someone down the road takes a dislike to you and tells HMRC you are making money on the side ! in the unfortunate scenario of a visit, from the moment you say it is just to help pay for your hobby and produce this simple record the kettle should have boiled for a cup of tea ready to show the nice man the bees !

But if in doing so you walk him through a shed with a uncapping tank, 12 frame extractor, honey warmer, 200 ltr settling tank and a map on the wall showing where your 60 + hives are situated !

 

[pargyle]

( pargyle ) yes keeping records is worth it if you are concerned and it is so so simple. A basic note book left hand page in-comings ( credits ) money going out. right hand page Outgoings ( debits ) money coming in. and keep receipts.

Then if someone down the road takes a dislike to you and tells HMRC you are making money on the side ! in the unfortunate scenario of a visit, from the moment you say it is just to help pay for your hobby and produce this simple record the kettle should have boiled for a cup of tea ready to show the nice man the bees !

But if in doing so you walk him through a shed with a uncapping tank, 12 frame extractor, honey warmer, 200 ltr settling tank and a map on the wall showing where your 60 + hives are situated !

Exactly, record keeping is justifying what you have bought and sold and the differenc is gross profit .. less overheads is nett profit. If your records do not match the reality of what you are doing then HMRC will have a field day.

Sadly, in these days of computing they have financial models that will tell them what your business should look like by comparison to every other similar business they monitor and tax.

Someone I know of had five market stalls ... cash business .. he, apparently, declared sales only from 3 of them .. but his costs reflected all of them ... his records were immaculate, except for the ommission of sales and pitch costs from 2 of them.

Foolish fellow - after they had tracked his diesel receipts, worked out the mileage and figured out where his other market stalls must be situated their roving inspector took photos of him at the markets he didn't declare and they threw the book at him ... He wasn't 'shopped' by anyone .. HMRC just knew that he could not be making so little profit on the costs he incurred.

They look with suspicion on all cash based businesses ...hair dressers, take away food stalls, market traders, fish and chip shops all seem to get more than their fair share of attention from HMRC so ..

If you keep records then keep them accurate and honest and keep the receipts ... and if you are fortunate enough to make a bit more than the £1000 they allow - declare it and pay the tax or spend it on more equipment or newer equipment or going to bee based events or training days. Just don't fall into the trap of thinking you are going to beat the revenue - the odds are they have seen it all before and have far more resources to make your life a misery than you care to think about.

Yes .. spit feathers that you have to pay tax, piss and moan that others get away with things or have offshore trusts to protect their millions but sleep easy knowing that you are squeaky clean ... the penalties for tax evasion for the individual or small business are draconian.

 

[chrisb]

" YES "
On the scale we are talking about it is so simple, I honestly do not know what all the worry is.

cash sales are a pain in the A***e luckily for me majority of sales are electronic. "o" I do love paper trails, cash sales constitutes petty cash

keeping records will also help in seeing what the hobby is costing " you "
it should help you to forecast costs,

 

[MuswellMetro]

" YES "
On the scale we are talking about it is so simple, I honestly do not know what all the worry is.

cash sales are a pain in the A***e luckily for me majority of sales are electronic. "o" I do love paper trails, cash sales constitutes petty cash

keeping records will also help in seeing what the hobby is costing " you "
it should help you to forecast costs,

I would have to hide the records from the Wife!!!, i have just type find "thorne" into my email account and printed off three years of thornes invoices for equipment.........definitely not making a profit

 

[chrisb]

My Apologies, I have always taken for granted that hiding ones spending habits from wives was a mandatory aid to survival.

 

[Nakedapiarist]

The Harrow honeycomb looks awful!

Eewwww, I totally agree and I'll normally shove any old bit of wax in my mouth. They are nicer containers than the standard tubs though.

For upping the value, I'm looking at cut comb - I don't get why it sells for such a high price when I find it so much less hassle to produce.

 

[jenkinsbrynmair]

It's probably harder than trying to hide your offshore investments from the journo's - maybe we should give dodgy Dave some pointers

 

[peteinwilts]

When I go to work (the one that pays the mortgage), I drive to work, take or buy lunch and snacks throughout the day, drive home.
The outgoings I have for that day, is not taken into consideration when I pay my income tax and national insurance.

I have not read the full statement, but have not seen the word 'profit' on the gov.uk website regarding the allowance. The statement is earnings.
If I buy £100 of frames, an £800 extractor, a nice shiny new beesuit and spend £400 in fuel, I cannot offset these costs against earnings of honey sold.

Selling £1000 of honey is still £1000 earnings regardless of how much it has cost to get there...

 

[jaybee76]

If you read the relevant paragraph you are allowed to deduct expenses:
"From April 2017, the government will introduce a new £1,000 allowance for property income and a £1,000 allowance for trading income. Individuals with property income or trading income below £1,000 will no longer need to declare or pay tax on that income. Those with income above the allowance will be able to calculate their taxable profit either by deducting their expenses in the normal way or by simply deducting the relevant allowance."

You can't claim mileage in your example as you are driving to your place of work, and eating lunch is considered a necessity. If you had to drive to an alternative place of work (for example, you had to temporarily run a branch of your companies business elsewhere you could claim this against your tax as long as your company did not reimburse you).

Selling honey over £1000 as this paragraph states is considered a trading income and therefore expenses are allowable. Or at least this is my interpretation (I'm not a tax advisor). You can't claim the lunch you ate between apiary visits but you can claim for your new frames or foundation.

 

[jaybee76]

So in short summary, the word "profit" is present in the third sentence of the paragraph referring to property and trading income allowances.

 

[chrisb]

It's probably harder than trying to hide your offshore investments from the journo's - maybe we should give dodgy Dave some pointers

 

[chrisb]

When I go to work (the one that pays the mortgage), I drive to work, take or buy lunch and snacks throughout the day, drive home.
The outgoings I have for that day, is not taken into consideration when I pay my income tax and national insurance.

Totally different subject, if you are in employment traveling to and from work and lunches are each individuals responsibility as they have no direct course to the running of the business. transportation to and from your place of employment is at your expense

Personal activity and use is different from business activity and use

even someone who owns there own business can not claim lunches against TAX, unless the lunch is for a purpose that is linked to the business Ie you might take a Buyer out to lunch to talk over a contract, that can be claimed as it is an action that influences the business.
Fuel costs. only expenses that are linked to the running of the business can be claimed Ie: if you use the company car to travel to work you can not claim that fuel cost thats private use . if the car is used for business activity like delivering goods then you can.

If you think your tax and NI are bad think about the employer who has to pay tax and NI contributions just so you can work for them. also those self employed pay tax on all there profit ( unless Ltd company ) and not just there wage, also we have to pay both class 1 and class 2 Ni contributions

 

[Samurailord]

So in short summary, the word "profit" is present in the third sentence of the paragraph referring to property and trading income allowances.

What it means is that if your income is below £1,000 you don't need to bother about declaring it or working out your profit(or loss) but as soon as it reaches £1,001 you will need to calculate your profit, so keep all your receipts for equipment, jars, labels, replacement queens, books, courses, mileage to and from trade shows, conventions and markets etc if you think there is any likelyhood that you will be able to sell more than £1,000 of product during the tax year.

If you have made any profit at all then that is what you will need to declare and you will have to pay tax on all of it.

You don't get the first £1,000 tax free, they just aren't interested in you if you haven't earned over £1,000 in the first place.

On the plus side, if you have made a loss you can also declare that and get it deducted from your taxable income (assuming you have other taxable income) and get a refund of tax overpaid - unless they start to class you as a hobbyist again if you make losses?

Andy