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Thread: Help please!

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    Exclamation Help please!

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    Hi everyone,

    I am new here and I have searched through the topics but I can't seem to find the right answers.

    So let me give you my background...

    I am a full time designer working for a limited company in an office. I get paid every month and I pay tax and NI each month through my salary.

    Completely separate from work...
    In May, I entered a competition and the prize was to have my design printed on greetings cards and sold at local craft fairs. I won this, and now my designs have been printed and a few cards have actually sold I get 10% of the sales of each card. These are sold at around 2 / 3 for 5 and so I get about 17p-20p per card. This is not a lot, however the only expense in creating the cards was my time. The company selling the cards have paid to get them printed and they are advertised through their website. I don't ever see the cards, I don't send them out etc, and I don't speak to anyone that buys them.

    So do I need to pay tax and NI on my profits?

    This was just a hobby, but I do technically get paid (even if it's 1 a month)

    Any help would be greatly appreciated

    Thanks in advance

    Louise

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    iBeads's Avatar
    iBeads is offline Senior Member 100+ crafts club
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    Quote Originally Posted by louisewhitmore View Post

    This is not a lot, however the only expense in creating the cards was my time.
    So do I need to pay tax and NI on my profits?

    This was just a hobby, but I do technically get paid (even if it's 1 a month)

    Any help would be greatly appreciated

    Thanks in advance

    Louise
    It is not true that the only expense was your time.

    Firstly, if you were self-employed, your time does not count as an expense.

    I doubt very much that you produced the design out of thin air. You probably used materials of some sort, and maybe a computer. In this case you can charge a proportion of the cost of your computer (even if it mainly your home computer).

    Also, you were based somewhere when you did the design. Did you do this at home? If so, then you can charge a proportion of your gas electric bill as an expense to offset against any tax. It may well turn out that HMRC owes you a tax refund (as you pay tax on your earnings as an employee).


    In your position, the best thing to do is to give the tax office a ring, tell them you did this as a hobby but it has resulted in royalties because you won the competition. Sometimes competition prizes are tax free, but you need to check this with HMRC.

    The only way to get a definitive answer on this is to ring the tax office. It can be really difficult to get through to them, but it's usually easier if you try first thing (I seem to recall they open at 8am, so when want to speak to them I start ringing their number at 7.55 and keep on until I get through).

    By the way, congratulations on winning the competition. Do you have a link so we can all admire your winning entry?
    Annie

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    Thank you so much Annie!

    The cards can be found here: www . wraptious . com/collections/louise-whitmore (sorry - can't actually add a link just yet!)

    I'm going to speak to the guy that runs Wraptious and see what he suggests too, but yes, I should ring HMRC! - Grrrr!

    I have been self employed before and I hated filling out tax returns, but I don't know if it's more complicated now as I'm working full time.

    Yes I agree with my time being an expense, but I did it for fun for a friends birthday as she loves blue tits and owls, and just decided to submit it for the competition.

    Louise

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    Caroleecrafts is offline Senior Member Try and catch up with this one.. What a crafter!!!
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    You are earning money, however small and yes you will need to register as s/e. You can get an NIC exemptions certificate as you will be paying a full stamp and can earn (used to be 3K pa) over you wages without having to pay NIC on your s/e earnings.

    You could also be asked for more designs at which point they should pay you for your design time as well as royalties. The company concerned may also have to advise the HMRC that they are paying someone Royalties, so may come back and bite you if not up front from the start

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