Beginner HELP NEEDED! The minefield of declaring tax on hobby photoghraphy

Debi Turner

Debi Turner

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Debi
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I am taking the first steps in taking my photography hobby a bit more seriously. I am in a full time job earning £18,000 per year. My "loose" plan is to invest in some new equipment, attend some workshops and approach friends and family members to offer baby photography sessions in order to gain experience and build a portfolio. Once I am happy that I have enough of a portfolio to work with, my intention is to start advertising through Facebook and my website (currently being created) and start to take on paid sessions. At the beginning, I will be taking small steps, maybe 4 or 5 projects per month.

At what point do I need to declare what I make from photography sessions to the tax man and start paying tax? I've looked online and the generic information guidelines are extremely confusing! I've had no experience whatsoever with tax returns as I have never taken on any self employment type work before.

Thanks
Debi
 
Debi Turner said:
I am taking the first steps in taking my photography hobby a bit more seriously. I am in a full time job earning £18,000 per year. My "loose" plan is to invest in some new equipment, attend some workshops and approach friends and family members to offer baby photography sessions in order to gain experience and build a portfolio. Once I am happy that I have enough of a portfolio to work with, my intention is to start advertising through Facebook and my website (currently being created) and start to take on paid sessions. At the beginning, I will be taking small steps, maybe 4 or 5 projects per month.

At what point do I need to declare what I make from photography sessions to the tax man and start paying tax? I've looked online and the generic information guidelines are extremely confusing! I've had no experience whatsoever with tax returns as I have never taken on any self employment type work before.

Thanks
Debi
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I should imagine as soon as you start to receive money for photography or any auxiliary earned income for that matter, you need to declare it.
 
I registered as soon as I earned any income, but you can always just give the tax office a call. I found them very helpful indeed when I was setting up the business.
 
Go and find an accountant,otherwise you are entering a minefield.
I don't think HMRC accept ignorance as an excuse.
 
MadWoman said:
I registered as soon as I earned any income, but you can always just give the tax office a call. I found them very helpful indeed when I was setting up the business.
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Thanks "Mad Woman" - tax office is next on the list :-)
 
troutfisher said:
Go and find an accountant, otherwise you are entering a minefield.
I don't think HMRC accept ignorance as an excuse.
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Troutfisher - I'm not sure I mentioned anywhere in my post that I was seeking advice exclusively from here. Tax office/accounts will be contacted however I wanted to gauge the response specifically from photographers. Not sure where you gathered the "ignorance" from!
 
Basically keeping good records makes it fairly simple. My other half was working self employed part time and another job. Kept a separate bank account for the self employed to keep things nice and simple. Tax assessment each year, and then a bill if you have earned enough.
 
J Veitch said:
Basically keeping good records makes it fairly simple. My other half was working self employed part time and another job. Kept a separate bank account for the self employed to keep things nice and simple. Tax assessment each year, and then a bill if you have earned enough.
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Thank you J Veitch - starting the records already and the only thing I've purchased is a domain name. Appreciate it.
 
All the information you need can be got from HMRC. If you are unable to do research properly yourself or ask reasonable questions of HMRC, then you might find an accountant invaluable.

But seriously, my first accountants bill was what killed my first business. He was an expert on book keeping but didn't have a clue with the help I needed. I'd say when you think your tax bill hits 4 figures, you might gain from some advice, but as a part time photographer you ought to be able to do it yourself.
 
Debi Turner said:
Troutfisher - I'm not sure I mentioned anywhere in my post that I was seeking advice exclusively from here. Tax office/accounts will be contacted however I wanted to gauge the response specifically from photographers. Not sure where you gathered the "ignorance" from!
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It's just a saying- nothing personal.

It's 'ignorance of the law is not innocence' - so the onus is on you to find out, not for them.
 
I read into this a while ago, somewhere it states that if you are just doing a few jobs here and there for friends or family, then you don't need to declare it for tax.

For this reason, I didn't start declaring my earnings until I started to do work for friends of friends or unknown clients.

It sounds like you will be okay whilst portfolio building for friends and family, but I would recommend declaring anything after you go outside of your social circle.
 
Mark G said:
I read into this a while ago, somewhere it states that if you are just doing a few jobs here and there for friends or family, then you don't need to declare it for tax.

For this reason, I didn't start declaring my earnings until I started to do work for friends of friends or unknown clients.

It sounds like you will be okay whilst portfolio building for friends and family, but I would recommend declaring anything after you go outside of your social circle.
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The advice is much more specific and easy to understand too.

Incidental earnings from a hobby are not declareable, the example would be if your workmates ask you to bake a cake and pay you for it = tax free earnings.

However as soon as you start to advertise for customers, all profits are taxable, so if you put up a notice on Facebook selling cakes, even if the customers are the same, and the prices are the same - you're now running a business.
 
J Veitch said:
https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

Take a note of business expenses including equipment as these may be deductible from your profits and reduce your tax bill at the end of the year.
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Thanks J Veitch. Initially I thought my initial outlay wouldn't be much, I have a decent camera and props seem easy to come by. Looking at the list though, there are plenty of deductible items that I will be using so that is great advice. Thank you!
 
Phil V said:
All the information you need can be got from HMRC. If you are unable to do research properly yourself or ask reasonable questions of HMRC, then you might find an accountant invaluable.

But seriously, my first accountants bill was what killed my first business. He was an expert on book keeping but didn't have a clue with the help I needed. I'd say when you think your tax bill hits 4 figures, you might gain from some advice, but as a part time photographer you ought to be able to do it yourself.
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Thanks Phil V and also for your honesty regarding your accountant's bill. I have known to be pretty anal in the past in creating spreadsheets to keep track of the money on a large family holiday where I was looking after the money so hopefully, I might be ok doing it myself. Alternatively, my brother has his own joinery business and his wife does his books so I hopefully can gain some knowledge from her.
$
 
Mark G said:
I read into this a while ago, somewhere it states that if you are just doing a few jobs here and there for friends or family, then you don't need to declare it for tax.

For this reason, I didn't start declaring my earnings until I started to do work for friends of friends or unknown clients.

It sounds like you will be okay whilst portfolio building for friends and family, but I would recommend declaring anything after you go outside of your social circle.
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Yes that is definitely the way I imagine it will have to go. The idea is to build the portfolio with family and friends (where I won't be charging) and after that, start advertising and charging. I reckon then from the first day I advertise on Facebook and publish my website, I will register the business and start declaring thereafter.
 
Phil V said:
The advice is much more specific and easy to understand too.

Incidental earnings from a hobby are not declareable, the example would be if your workmates ask you to bake a cake and pay you for it = tax free earnings.

However as soon as you start to advertise for customers, all profits are taxable, so if you put up a notice on Facebook selling cakes, even if the customers are the same, and the prices are the same - you're now running a business.
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Thanks again Phil. As above, I will start to declare once I start advertising on FB and publish my website.

Would just like to say thank you to you all for your advice, it really is appreciated. I respect the industry far too much to try and enter it without doing things right. Anyone can call themselves a photographer but it takes a proper professional to command the respect that they deserve, one person calling themselves a photographer and doing a bad job can tarnish the industry and I don't want to do that.
Thanks again.
Debi
 
Get paid in cash ;)

Seriously though you'll need to complete a tax return each year, but you can offset earnings against equipment, phone and internet bills, if you have a home office/studio you can claim some of your utilities, perhaps a % of your mortgage/rent.

My tax advisor charges £300 + vat to do 2 returns mine and my wife's. It might save you in the longer term to seek professional advice on tax savings.
 
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Gyles said:
Get paid in cash ;)

Seriously though you'll need to complete a tax return each year, but you can offset earnings against equipment, phone and internet bills, if you have a home office/studio you can claim some of your utilities, perhaps a % of your mortgage/rent.

My tax advisor charges £300 + vat to do 2 returns mine and my wife's. It might save you in the longer term to seek professional advice on tax savings.
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For home office there's now a fixed allowance scheme. The same as simple mileage, for part time businesses HMRC really do make it simple.
 
I was 'Investigated ONCE' -- they sent my Accountant a message saying their Computer says I was not 'Drawing enough' from my business so we had to go to Romford Tax Office and saw a fresh-faced girl straight out of Uni and I had to explain I had split up with Wife and was on my own -- so she wanted to know how much Wife was earning ( £9,000) and all about our expenses -- how much did we spend on Holidays -- I told her we went 'Youth Hostelling' and she had never heard of Youth Hostels so my Accountant, an old school friend had to tell her how HE went Hostelling. then she wanted to know how much we spent on alcohol -- I told her the occasional bottle of Lambrusco from Tescos and she had never heard of Lambrusco -- " How MUCH a bottle " she said " Well about £3 odd" I told her -- anyway -- it ended up that HMRC had to pay ME £ 86 in the end -- if they had not 'Investigated' the British Revenue would have been £ 86 better off -----
 
Phil V said:
For home office there's now a fixed allowance scheme. The same as simple mileage, for part time businesses HMRC really do make it simple.
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I think there was talk of "Live" online tax returns so that you could log on and update your return throughout the year.
 
pentaxpete said:
I was 'Investigated ONCE' -- they sent my Accountant a message saying their Computer says I was not 'Drawing enough' from my business so we had to go to Romford Tax Office and saw a fresh-faced girl straight out of Uni and I had to explain I had split up with Wife and was on my own -- so she wanted to know how much Wife was earning ( £9,000) and all about our expenses -- how much did we spend on Holidays -- I told her we went 'Youth Hostelling' and she had never heard of Youth Hostels so my Accountant, an old school friend had to tell her how HE went Hostelling. then she wanted to know how much we spent on alcohol -- I told her the occasional bottle of Lambrusco from Tescos and she had never heard of Lambrusco -- " How MUCH a bottle " she said " Well about £3 odd" I told her -- anyway -- it ended up that HMRC had to pay ME £ 86 in the end -- if they had not 'Investigated' the British Revenue would have been £ 86 better off -----
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£86, that's about 28 bottles of Lambrusco and 13 carrier bags to transport them in (make good sick bags too).........celebrate.
 
Phil V said:
All the information you need can be got from HMRC. If you are unable to do research properly yourself or ask reasonable questions of HMRC, then you might find an accountant invaluable.

But seriously, my first accountants bill was what killed my first business. He was an expert on book keeping but didn't have a clue with the help I needed. I'd say when you think your tax bill hits 4 figures, you might gain from some advice, but as a part time photographer you ought to be able to do it yourself.
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I would be inclined to agree with this.

Get registered as self employed would be step one.

Whilst an accountant can save you money, he/she has to save you more than they cost and its difficult to estimate this, especially in the first year.

There are lots of things you 'can' write off as business expenses and these tend to be the things that an accountant can help with but spending £500 on an accountant to save paying £50 in expenses really isn't worth it.

I have done the self assessment twice now (whilst having another full time job) and its fairly straight forward as long as you have kept a spreadsheet of income received.

Granted, I didn't both with expenses but mine would have been minimal and certainly not worth bothering to pay for an accountant.

Cheers
 
jakeblu said:
I should imagine as soon as you start to receive money for photography or any auxiliary earned income for that matter, you need to declare it.
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As soon as you start buying for the new company. Camera, lenses, stationary, PC, corporate clothing...

All losses which can be claimed which will reduce your tax outgoings.

Doug Richard of Dragon's den fame has a decent book in starting creative industry businesses.
 
st599 said:
As soon as you start buying for the new company. Camera, lenses, stationary, PC, corporate clothing...

All losses which can be claimed which will reduce your tax outgoings.

Doug Richard of Dragon's den fame has a decent book in starting creative industry businesses.
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Is a different answer.
You should record your spending of course.
But you don't register until there's an income.
 
As others have said, it might sound a little daunting to start with but it's not actually bad at all.

HMRC are very helpful and will answer any questions you have...it's really best to get advice from them, they make the rules!

Simon
 
Phil V said:
Is a different answer.
You should record your spending of course.
But you don't register until there's an income.
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You can make a loss for the first 3 years, offset against income tax on your other job.

You don't need an income at the start.
 
st599 said:
You can make a loss for the first 3 years, offset against income tax on your other job.

You don't need an income at the start.
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There's a difference between a profit and an income.

You're not trading till you've made a sale.

Of course you could register without making a sale, I just find it an odd approach. It's a hobby till you make a sale, and once you're trading you can claim your previous expenses. It's semantics, but for me, the easy instruction is register when you make a sale or expect to.
 
Phil V said:
There's a difference between a profit and an income.

You're not trading till you've made a sale.

Of course you could register without making a sale, I just find it an odd approach. It's a hobby till you make a sale, and once you're trading you can claim your previous expenses. It's semantics, but for me, the easy instruction is register when you make a sale or expect to.
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I agree. Don't do anything until you need to.


Steve.
 
My advice is to register when you make your first sale, you can bring in assets after that point (cameras computers you already own). I would also suggest staying in your job for the first 4 years and make a loss, make sure the equipment costs, use of home as office and mileage allowances etc outweigh your profits. Don't hamper your sales, just have high initial costs so that you can get income tax back. Then in year 5 if it is not working pack it in or if it is turn a profit and push in from there if you are enjoying it potentially making it your career, or a good income supplement.
 
HMRC have a really useful guide on their website to starting a business - whether as self employed or a limited company. You don't need an accountant / tax advisor when you start out (even a few hundred pounds is a lot to pay in fees at that point) but when things get complex, it should be advantageous as you'll get more of an idea about what you can legitimately deduct from earnings.

Personally I wouldn't say you only have to declare income when you start advertising...income is income and a tax inspector would say well you may not have advertised but you are earning a substantial amount of income. Badges of trade are a complex / judgemental area. A good indicator is - are the fees you are earning just or not covering your travel/printing expenses (ie you are working essentially free in order to build up your portfolio...) or are you earning a profit? If it's even remotely profitable then no matter how you have found the business - word of mouth or ads in newspapers, you are earning income....

A separate account is a good idea - my advice to new self-employed people is to always split off the tax and keep it somewhere so you don't spend it and are prepared to pay the tax bill the following January.
 
bluep said:
Personally I wouldn't say you only have to declare income when you start advertising...income is income and a tax inspector would say well you may not have advertised but you are earning a substantial amount of income. Badges of trade are a complex / judgemental area. A good indicator is - are the fees you are earning just or not covering your travel/printing expenses (ie you are working essentially free in order to build up your portfolio...) or are you earning a profit? If it's even remotely profitable then no matter how you have found the business - word of mouth or ads in newspapers, you are earning income...
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Well HMRC would disagree.

And I have previously posted links to their guidance on what's an acceptable income from a hobby, and when you're running a business.

Quick thought!

If you fill your car boot with unwanted items on Sunday and flog it at a car boot sale, will the tax man be interested?

If you go to the wholesalers Saturday and buy a load of cheap toys to sell at a car boot sale, would the taxman be interested?

It's a simple thing to get your head around, whether or not you're 'trading' is fairly close to common sense.
 
Your examples actually support what I'm saying. If you sell your old unwanted personal items, HMRC wouldn't be interested. If you are sourcing items to sell to generate income, then you are trading. Which is where a fair few eBay trader have had issues in recent targeted investigations! Doesn't matter if you advertise on FB or do it by word of mouth, you are generating income...

I probably explained clumsily what I meant about earning to cover your costs. I would explain it to a caseworker (if they were ever interested at that level) that there was no income, just a reimbursement of travel and materials for a beginner photographer to gain experience. I think HMRC would struggle to say this is taxable income/trade as there is no element of intending to or making a profit.

However, it does get a bit more complex then around trade when losses are involved as HMRC get difficult about agreeing when a trade is occurring and especially trading with a view to making a profit. Having cake and eating it..
 
bluep said:
Your examples actually support what I'm saying. If you sell your old unwanted personal items, HMRC wouldn't be interested. If you are sourcing items to sell to generate income, then you are trading. Which is where a fair few eBay trader have had issues in recent targeted investigations! Doesn't matter if you advertise on FB or do it by word of mouth, you are generating income...

I probably explained clumsily what I meant about earning to cover your costs. I would explain it to a caseworker (if they were ever interested at that level) that there was no income, just a reimbursement of travel and materials for a beginner photographer to gain experience. I think HMRC would struggle to say this is taxable income/trade as there is no element of intending to or making a profit.

However, it does get a bit more complex then around trade when losses are involved as HMRC get difficult about agreeing when a trade is occurring and especially trading with a view to making a profit. Having cake and eating it..
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Well if you meant the same as me, you definitely explained clumsily.
 
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