Just released on Amazon!
I Only Write For Fun
Only a Hobby
Many of us will feel this way and perhaps feel that surely a hobby is not taxable. Sure we don’t aim to become rich at this and most of us, to be fair, will not. In fact it’s rare for anyone to go from unknown to best seller even after years of writing.
We all know about the exceptions, such as Amanda Hawking and John Locke to name but two. And these are the exceptions.
After less than a year and three books published, what do I know? Of course I would love to sell more, but I am realistic to know that this will not happen overnight if it happens at all. My approach is to write more, just one book a week, and a small book at that.
When does my hobby become a taxable activity? There are a number of ways that the HMRC may determine this point.
They have the ‘badges of trade’, which they can apply to your hobby to see if you are ‘trading’ or ‘in business’. I will cover these later.
For now, just be aware that what starts as a hobby can soon become a vocation just as carrying on a trade or profession can bring people to pick up the mighty pen.
Either way, a new source of income must be reported to the Taxman and you may then be required to complete a tax return.
I made pennies
In my case I have sold maybe fifty books (84 at the time of trying to finish and publish) so far. So I have not made any real money, so I don’t have any tax to pay so why should I tell the Taxman at all.
Firstly, I should tell the Taxman because a new source of income should technically be notified within three months subject to some fairly draconian penalties if I don’t.
That’s one good reason.
Haven’t Even Received a Payment Yet
There is a £10.00 payment threshold for sales at Amazon UK. So why should I get too excited about telling the Taxman I am an author when at the rate of sales to date, it might be weeks before I get a single penny from Amazon for my book sales.
Of course I’m only doing it for a hobby anyway so what is the difference.
Well first of all I believe I will sell more next year, as I improve my marketing skills, add new titles in the same genres and simply keep writing and publishing books.
Accrual accounting is one of the basic rules of tax, certainly in the UK, so strictly speaking, once the income is earned, it should be accounted for as income. This would leave me open to tax well before receiving the money.
Luckily there are special rules for authors and artists and the like. I will look at them later.
How Will the Taxman Know?
He is online now
All I should say here is that with the growth and diversification of online business worldwide and the multitude of ways of finding online businesses, it should not come as a surprise that the Taxman is getting increasingly skilled at using freely available online information to catch out the tax dodgers.
Only a Hobby
Many of us will feel this way and perhaps feel that surely a hobby is not taxable. Sure we don’t aim to become rich at this and most of us, to be fair, will not. In fact it’s rare for anyone to go from unknown to best seller even after years of writing.
We all know about the exceptions, such as Amanda Hawking and John Locke to name but two. And these are the exceptions.
After less than a year and three books published, what do I know? Of course I would love to sell more, but I am realistic to know that this will not happen overnight if it happens at all. My approach is to write more, just one book a week, and a small book at that.
When does my hobby become a taxable activity? There are a number of ways that the HMRC may determine this point.
They have the ‘badges of trade’, which they can apply to your hobby to see if you are ‘trading’ or ‘in business’. I will cover these later.
For now, just be aware that what starts as a hobby can soon become a vocation just as carrying on a trade or profession can bring people to pick up the mighty pen.
Either way, a new source of income must be reported to the Taxman and you may then be required to complete a tax return.
I made pennies
In my case I have sold maybe fifty books (84 at the time of trying to finish and publish) so far. So I have not made any real money, so I don’t have any tax to pay so why should I tell the Taxman at all.
Firstly, I should tell the Taxman because a new source of income should technically be notified within three months subject to some fairly draconian penalties if I don’t.
That’s one good reason.
Haven’t Even Received a Payment Yet
There is a £10.00 payment threshold for sales at Amazon UK. So why should I get too excited about telling the Taxman I am an author when at the rate of sales to date, it might be weeks before I get a single penny from Amazon for my book sales.
Of course I’m only doing it for a hobby anyway so what is the difference.
Well first of all I believe I will sell more next year, as I improve my marketing skills, add new titles in the same genres and simply keep writing and publishing books.
Accrual accounting is one of the basic rules of tax, certainly in the UK, so strictly speaking, once the income is earned, it should be accounted for as income. This would leave me open to tax well before receiving the money.
Luckily there are special rules for authors and artists and the like. I will look at them later.
How Will the Taxman Know?
He is online now
All I should say here is that with the growth and diversification of online business worldwide and the multitude of ways of finding online businesses, it should not come as a surprise that the Taxman is getting increasingly skilled at using freely available online information to catch out the tax dodgers.
