Christmas crafters – be ready for a tax bill
People selling homemade crafts and Christmas cards at markets this December need to keep within the £1,000 side-hustle threshold, or face a demand from HMRC.
With Christmas markets springing up across the country, HMRC has warned anyone selling handmade gifts and trinkets at venues around the country that they will need to check if their earnings exceed £1,000 a year.
Anyone who has earned over the £1,000 threshold from side-hustles in the 2024-25 tax year will need to register for self-assessment as a sole trader, file their return, and pay any tax due by 31st January 2027. That includes any income from Christmas Fairs or even selling your crafts to friends and family.
If you have a ‘day-job’ and crafting is a hobby, that doesn’t mean it doesn’t apply for you. As soon as you sell your crafts, whether it’s at a Christmas market or on one of the online platforms, such as Esty, Tedoo or Make Me, you start clocking up income.
Of course, you can claim expenses back against your earnings, for example, cost of materials used in the creation of the items, postage, packing materials, travel costs (typically 45p a mile if you use your own vehicle) and any other expenses you incur in your craft ‘business’. That means you need to keep receipts and log both income and outgoings. Then, anything left constitutes profit – and you can make up to £1,000 – your trade allowance – before HMRC will want you to pay tax.
HMRC has stressed the important distinction between simply decluttering homes by selling unwanted personal belongings – which doesn’t usually require reporting to HMRC – and trading activities like making items to sell for profit, which may be taxable.
The badges of trade need to be considered. Is the sale of items from a profit motive view point? Are there numerous transactions? These differ to selling unwanted items around the home or selling out of hardship.
So, if you have a craft hobby and sell the things you make, ensure you keep records. Unsure if you might be affected by this, then get in touch with our team today and we’ll be able to advise you on your situation.
