Crosswords1 min ago
Capital Gains Or Income Tax?
3 Answers
I buy and sell British gold coins as a hobby, I usually make a small profit on them but just buy more. Sometimes I may sell part of my collection if I need something extra or if there is a peak in the market. When does this hobby become a business and I need to declare it?
Answers
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Theoretically at least, if someone buys something for 50p at a car boot sale, knowing that they'll sell it on (rather than using it in some way), and they then sell it for £1 on Gumtree, they're obliged to register their 'business' and declare their 50p profit as taxable income.
While that might seem an extreme example, HMRC do take an interest in activities which generate hardly any profit. For example, an elderly lady I knew ran tea dances in a village hall every month or two, simply as a hobby and as a way of meeting people. After she'd paid for the hire of the hall, for the organist who was providing the music, for the refreshments and for her fuel to and from the venue she might typically make around a tenner profit from each dance and it never occurred to her to register her 'business' with HMRC. However they became aware of her activities and were quickly sending her very nasty letters, threatening to fine her heavily for running a non-registered business and for not declaring the 'profit' from that business on her tax returns.
So it would probably be wisest to register for self-assessment with HMRC and notify them about the 'business' you're running. You'll then need to submit an annual tax return online but that's incredibly easy, taking just a few minutes to complete. Small businesses don't need to submit detailed accounts; you just need to keep your own records and declare your 'profit' for the year.
While that might seem an extreme example, HMRC do take an interest in activities which generate hardly any profit. For example, an elderly lady I knew ran tea dances in a village hall every month or two, simply as a hobby and as a way of meeting people. After she'd paid for the hire of the hall, for the organist who was providing the music, for the refreshments and for her fuel to and from the venue she might typically make around a tenner profit from each dance and it never occurred to her to register her 'business' with HMRC. However they became aware of her activities and were quickly sending her very nasty letters, threatening to fine her heavily for running a non-registered business and for not declaring the 'profit' from that business on her tax returns.
So it would probably be wisest to register for self-assessment with HMRC and notify them about the 'business' you're running. You'll then need to submit an annual tax return online but that's incredibly easy, taking just a few minutes to complete. Small businesses don't need to submit detailed accounts; you just need to keep your own records and declare your 'profit' for the year.
good question - certainly taxed me .....
and your question is in the right place - tax or revenue law
actually when I first read it - I thought this was a hobby - you bought coins and kept them like stamps
actually on re reading ( and you are allowed to clarify if you want ) - "I buy and SELL gold coins as a hobby"
and not "I collect gold coins as a hobby ...."
clearly trade and you need to pay tax
[oops I first thought clearly a hobby (collection of coins) and so clearly NOT a trade - but that just goes to show I should read things more carefully]
read this
http://
I googled "UK when is a hobby income ?"
You need to know your trade- income and sales
three line accounts sufficient
start here
https:/
sorry
depending on the profits ( NOT sales) you may need to make a voluntary declaration to the tax man ( you were trading and didnt realise there was a tax charge)
and once you are on the yearly tax form carousel
you MUST sign off at the end and not say - "oo lean year this year no tax form required" because you will get an automatic fine for non-submission
sorry again
BC's tear jerking example of the little old lady throwing tea dances where she charged ....trading profit of ten quid a head hur hur hur
is obviously trading by the way ....
depending on your trading profit - (small do it yourself, large get an accountant to do it) I would employ an acct to do the first year
as this isnt a start-up, you have been doing this for a year or two and so there is a previous tax charge which is negotiable.....
because once up and running they are just three line .....
( they is the tax return)
and your question is in the right place - tax or revenue law
actually when I first read it - I thought this was a hobby - you bought coins and kept them like stamps
actually on re reading ( and you are allowed to clarify if you want ) - "I buy and SELL gold coins as a hobby"
and not "I collect gold coins as a hobby ...."
clearly trade and you need to pay tax
[oops I first thought clearly a hobby (collection of coins) and so clearly NOT a trade - but that just goes to show I should read things more carefully]
read this
http://
I googled "UK when is a hobby income ?"
You need to know your trade- income and sales
three line accounts sufficient
start here
https:/
sorry
depending on the profits ( NOT sales) you may need to make a voluntary declaration to the tax man ( you were trading and didnt realise there was a tax charge)
and once you are on the yearly tax form carousel
you MUST sign off at the end and not say - "oo lean year this year no tax form required" because you will get an automatic fine for non-submission
sorry again
BC's tear jerking example of the little old lady throwing tea dances where she charged ....trading profit of ten quid a head hur hur hur
is obviously trading by the way ....
depending on your trading profit - (small do it yourself, large get an accountant to do it) I would employ an acct to do the first year
as this isnt a start-up, you have been doing this for a year or two and so there is a previous tax charge which is negotiable.....
because once up and running they are just three line .....
( they is the tax return)
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