TSCB 7: Those rules apply to me? How? Summary of Expenses so far

As we’ve now reached a grand total of 7 articles in the Tax for Small Craft Business Series, and quite a few people are showing a bit of bewilderment, there’s a couple of points I think I need to emphasise, and also examples to share about how the rules can be very simple really. No, honestly they can, although perhaps not so much for craft businesses because of the stock valuation issues.

This post follows the steps a brand new small crafting business (a made up person called Alice’s made up new venture making & selling fudge) takes to get her first year’s figures into their Tax Return, based on the issues about trading periods and the sorts of expenses we’ve covered so far – so it’s not complete by any means, but should give you a bit of help to understand how what we’ve covered operates in real life.

The example ended up quite long, so it’s in two parts:

• Today’s post covers how to deal with all the ‘normal running costs’ expenses – that is anything that’s not ‘stock’.
• The second part (available on Wednesday) will cover the ‘stock’ expense and a bit more on stock valuation, and getting the figures into the Tax Return itself.



Featured Seller: BrightStar 109 (Claire English) See her Etsy shop here

and about her work at the foot of this article

TSCB 1 - When will the Revenue be interested in me?

The first thing you need to know is that the way you are taxed in the UK depends very much on particular circumstances: if you fall into one set of rules, you're taxed differently to falling into another set of rules.  It's very important that you understand that the rules are cumulative, your facts need to fit the rules in the order HMRC has laid down, you can't just jump ahead and think 'oh yeah the second bit applies so the result is for me' - nope ALL of it has to apply: and the rules can be quite intricate, so you ALWAYS need to go and do the extra reading before taking a decision on anything I'm writing about!

So, the first question you need to ask yourself is whether or not HM Revenue & Customs (HMRC for short) are going to be interested in you selling your stuff.  The answer depends on what sort of stuff you are selling and what your intentions are - are you a hobbyist or a trader?