Consultants entitled to £212k fee because of implied contract term
Sam Lyon Head of Corporate & Commercial reports on this recent case. A consultants firm were entitled to a large fee for introducing a client to an insurance...
Sam Lyon Head of Corporate & Commercial reports on this recent case. A consultants firm were entitled to a large fee for introducing a client to an insurance...
Megan Wilkinson, Associate Solicitor, reports on this recent case. A man has been removed as an executor of his mother’s Will after his brother complained that...
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The past year of furlough and
flexible working has given people more time to focus on their hobbies. Whether
its homemade cakes, up-cycled furniture, jewellery or pet portraits, we have
seen an increase in people turning their hobbies into a nice source of extra
income. So, it’s important to ask: what’s the position on side hustles and tax?
Are you trading?
It can be hard to tell exactly when your hobby goes from just that, to a trade.
This makes it easy to forget that you might need to tell HMRC about your
additional income.
The requirement to let HMRC know about your income applies to all kinds of
informal arrangements: from making sales online, to taking on casual jobs like
gardening, dog walking or babysitting, and even renting out property or part of
your home.
So what will HMRC be concerned with? They will want answers to these questions:
Has the individual effectively
set up a business?
and
Does the income generated amount to trading income or property income?
HMRC looks for specific signs to decide on the latter point. These are often called the ‘badges of trade’. Key signs include:
• whether there is an intention to make a profit
• the number of transactions
• the way sales are carried out
You may need to notify HMRC if you have additional income that
is not from your usual employer or business. If you think this relates to you,
the best time to let us know about any additional income is when we come to
prepare your assessment tax returns. We can advise whether income should be
disclosed, and the appropriate timescale for notifying HMRC.
Is it taxable?
There are several special rules that may cover some casual income. Two relatively new allowances - the Trading Allowance and the Property Allowance - may be available to cover small amounts you have received. Up to £1,000 per year tax-free is provided by each allowance. If someone has both types of income, they can use both the allowances.
There is no need to tell HMRC or declare the income on a tax return, when
annual gross property/trading income is £1,000 or less. However, you may still
need to submit a tax return, depending on other income. Certain circumstances
will require someone with trading income to register for Self-Assessment and
complete a return.
Depending on the individual circumstances, these allowances may not provide the
most tax-efficient means of dealing with income and expenses. We would always
recommend speaking to one of the RfM Team about your unique situation. Please
contact us for advice on this or any other such matters.
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