Money Tax Smart
Trading or
Hobby?
Trading or Hobby?
You may be wondering if providing musical entertainment services is considered a hobby or trade and whether they are taxable as trading income. HMRC uses badges of trade to decide whether an activity is a trade or just a hobby. Key factors include profit motive was the aim to make money? Frequency, are sales regular or one off? If you are selling goods then HMRC will consider the nature of the asset? is it an asset typically sold by traders. Timeframe was it sold soon after purchase? Modifications, was it improved before selling? HMRC considers all these points together, not just one.
Multiple Choice
Which is not a badge of trade?
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Profit motive
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Number of transactions
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Personal enjoyment
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Method of acquisition
Answer 3, Personal enjoyment. Find out more contact moneytaxsmart.co.uk