{"id":1734,"date":"2020-07-30T12:37:31","date_gmt":"2020-07-30T12:37:31","guid":{"rendered":"https:\/\/www.wizzaccounting.co.uk\/blog\/?p=1734"},"modified":"2021-10-12T12:20:32","modified_gmt":"2021-10-12T12:20:32","slug":"when-does-a-hobby-become-a-business-for-tax-purposes","status":"publish","type":"post","link":"https:\/\/www.wizzaccounting.co.uk\/blog\/when-does-a-hobby-become-a-business-for-tax-purposes\/","title":{"rendered":"When Does A Hobby Become A Business For Tax Purposes?"},"content":{"rendered":"

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If you have a hobby that you enjoy and are good at, this can often be a great way to earn some extra money on the side.<\/p>\n

Maybe you sell things that you have made such as arts and crafts or cakes, or maybe you sing or play a musical instrument and can get paid to perform.<\/p>\n

Whatever hobby you enjoy, a \u2018side hustle\u2019 can be useful as an extra income stream. However, it is important to understand what the tax liabilities are when you make money from your hobby.<\/p>\n

In this blog post we will explain the UK hobby business tax<\/a> rules and when you need to think about registering your hobby as a business.<\/p>\n

Is it a hobby or a business?<\/h2>\n

The main difference between a hobby and a business is that you don\u2019t have to pay tax on your hobbies. If you are simply doing something you love and not making any profit from it then you do not need to tell HMRC about what you are doing.<\/p>\n

However, as soon as you start making money from your hobby (selling the cakes you bake, being paid to play your musical instrument etc.) then your hobby may be considered a business by HMRC.<\/p>\n

HMRC have a series of questions, known as HMRC Badges of Trade<\/a>, that determine whether your hobby has become a business for tax purposes.<\/p>\n

If you answer yes to any of these questions, then it is likely that your hobby has become a business:<\/p>\n