Tax on 'hobby' income

[Riverbank]

In the last year my partner has started doing some paid DIY work alongside a self-employed part time office-based contract. Last financial year he earned around £3000 (mostly cash in hand) from the DIY work and had a lot of start up equipment costs + van hire expenses. So far this year he's earning on average £500 a month. An accountant friend advised this is more of a hobby than a job and so there was no need to declare it on his income tax return. Is this true? Thanks!

[robbob]

An accountant friend advised this is more of a hobby than a job

What's the reasonig behind being a hobby when its paid work for profit?



Charging people for DIY work and making a profit (ignoring one of startup costs) - that sounds like a trade to me,particularly if he is making £500 (profit?) per month.


https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20050

[Riverbank]

Thanks for the response. It's an average of £500 per month in payments not profit - materials, van hire etc are included in payments. I guess the thinking behind the hobby advice is that the profit is too low to be a proper business. The idea is that my partner gains experience before deciding whether it's a viable business and one he wants to pursue.

[SteLacca]

I agree with robbob, nothing about this sounds like a hobby.

It sounds as though the accountant friend is suggesting your partner tries it on. Not recommended. If HMRC were to challenge and any appeal finished up at tribunal, their purposeful interpretation of the law would almost certainly decide that the rules regarding hobbies were never intended to catch what is clearly a business (albeit a small one, but a business nevertheless).

[Riverbank]

This is what I thought. He is declaring it now. Thank you!

[scorpions321]

This is his hobby that's right but as he is getting paid its no longer a hobby. Its a job. Good to hear he is declaring it now.