Introduction to self-employment
Welcome to the ‘Self-employed’ section of the Tax Guide for Students' website. This section provides more detail than the ‘Tax essentials’ section, and is for you if you are self-employed and on a low income. Self-employed people are those who ‘work for themselves’.
If you are self-employed, you will have to deal with HM Revenue & Customs (‘HMRC’), as they assess and collect your tax and pay out tax credits and other benefits.
HMRC do not always get things right. So it is important for you to check the tax you pay on your self-employment income. You may also need to contact HMRC if you do not understand something or if you disagree with them.
Are you self-employed?
You need to decide if you are trading or simply pursuing a hobby. Of course, the problem is that many businesses actually start off as hobbies.
If you are selling just a few of paintings you have done yourself it is unlikely this would amount to self-employment. It may well be classed as a hobby and not be taxable at all.
When the amounts become more substantial, the proceeds would be taxable (after deducting any expenses), but the activity may not be an actual trade.
If you had your own website and took commissions, for example, the position would be different. The following statements tend towards self-employment and having a trade:
1. Frequent transactions
3. Buying items and either selling them immediately or changing them/making them into something else and then them selling on.
There is a useful section on the HMRC website that may help you..