Peter said > Have you checked that with HMRC?  I was not aware that they 
were willing to subsidise any hobbies.

Randall added: >The same applies in the US. You cannot deduct losses from 
hobbies
(legally, anyway).<

I should not have been so general or beekeepers could be led to error. 
Caution is needed - or the taxman could pounce.

In UK, what matters is whether an activity is a 'hobby' or 'trading'.  The 
main test is 'intent' to make a profit.  Hobby income such as selling 
surplus honey to friends in a bumper year is exempt from taxation as the 
surplus arises by chance, not intent. Whereas, if the beekeeper buys in 
honey to increase profit from sales, that is taxable trading. And if a 
beekeeper increases the number of hives such that surplus honey is not 
chance but a deliberate intention, or gives talks for fees, writes pamphlets 
to sell or licences use of a copyright design (such as the Dartington Long 
Deep Hive)  then he (me) is trading. So I should not have described myself 
as a hobbyist even though I keep bees primarily for interest, not as the 
core of a business.

If trading, then what are allowable expences in UK, and can a beekeeper 
consistently make a loss?    ITA 2007, s 66(1), states, ‘Trade loss relief 
against general income for a loss made in a trade in a tax year is not 
available unless the trade is commercial’. It seems that allowable expenses 
are those spent on earning whatever income you receive and not for private 
or personal reasons. Also capital expenditure is not classed as an expense. 
So I can claim for attending a conference to get information that keeps me 
up to date, but not if the intent is to just to enjoy meeting friends.  And 
I can buy books to read but not to add to my library as a capital asset. 
Losses can be recorded provided the intention is to move into profit, i.e. 
'commercial' - and who knows, now that my design of hive is at last being 
made by the UK's largest bee supplier, even I can hope to manage that.  To 
date my tax return has never been challenged by the taxman.

Note that in UK expences have to be 'wholly and exclusively incurred for the 
business' but NOT 'necessarily'. Ed Costanza  said  that in the US however 
expences must be 'ordinary and necessary', so maybe in the land of the free 
you are not free to claim for using a large car for your business where a 
smaller one would do - or going to a conference when all the information you 
need is available on Bee-L!

Robin

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