[Richmond]

Your original post suggests this is a smallholding yet to be. Therefore why don't you just wait and see exactly what "surplus" you generate. It may be less than you think. A little bit of extra produce over and above what you can sensibly eat and/or freeze for your own consumption in leaner months can be sold perfectly legally at the "farm gate", eg eggs, honey, preserves, veg, fruit ......  for cash in an honesty box or callers at the house - at least that's what everyone does round here, including us!

And if this is a retirement project, then think about how much work you realistically want to be doing eg if you only use a dozen or so eggs a week then you only need to keep 3 or 4 hens. If you only eat 1 pig a year then you only need to rear 2 weaners and sell one of them, putting yours in the freezer etc etc etc

[SallyintNorth]

Your original post suggests this is a smallholding yet to be. Therefore why don't you just wait and see exactly what "surplus" you generate.

Because they want to be able to offset / reclaim the VAT on the setup costs, I would imagine

[doganjo]

Your original post suggests this is a smallholding yet to be. Therefore why don't you just wait and see exactly what "surplus" you generate.

Because they want to be able to offset / reclaim the VAT on the setup costs, I would imagine

VAT was not mentioned in the original post.

[Womble]

QUOTE:
You must send a tax return if, in the last tax year (6 April to 5 April), you were: self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on) - this is a bit misleading too - does that mean before business expenses or before things like annual investment allowance
UNQUOTE {Why are my quotes formatting weird then??}

Does anybody know the answer to this question, BTW?  It's a hell of a difference if the £1,000 refers to turnover or profit!

BTW, VAT registration is really nothing to be scared of. It requires you to keep good records, for sure. But once you have those records, quarterly VAT returns can be filed these days with a single click.

[arobwk]

Note that I am not a trained accountant.  However, my understanding is this:

If one is not registered as a Sole Trader then one can only bring in GROSS income of £1k (?? £2k for a couple) without needing to tell the Tax Man.  BUT if one is registered as a Sole Trader/s then one can account for income AND expenses AND eligible Capital costs AND losses:  in other words, as Sole trader/s one can make a loss and offset that loss against other income on one's income tax return, but NOT if one uses "Cash Basis" accounting for the Sole Trader biz. 

[It's taken me years to half-understand tax rules: I'm still learning, so do go check anything I've said before acting.]

As to declaring losses year on year on year on year and on and on and on;  one day the Tax Man will come calling to check you out & challenge biz viability !!

[doganjo]

Not quite that simple
Quote from HMRC - You’ll need to register by 5 October in the second tax year after you started trading if you earned more than £1000 from self-employment in the previous tax year

So, for example, if you had Sales of more than £1000 in the year to say 5th April 2019, (that is trading started 6th April 2018) then you MUST register as a sole trader (or a partnership if there are more than one of you running the business and/or taking drawings (wages/benefits) from it, by 5th October 2019, etc

The £1000 rule applies to every year, so as soon as you go over that at the end of any financial year, you must register with HMRC the following October

Then to make matters less complicated (according to HMRC  ) HMRC’s ‘Making Tax Digital’ programme is being phased in over a number of years, following the announcement in 2015 that it was the Government’s intention to eventually abolish the Self Assessment tax return.

MTD will eventually cover all sole traders whether they are VAT registered or not as below:

April 2022: MTD will be compulsory and extended to cover all UK VAT registered businesses from 1 April 2022

April 2023: MTD will apply to taxpayers who file Income Tax Self Assessments for business or property income of more than £10,000 a year; but teh aim is to have all sole traders caught in the MTD system

You must use compatible software to keep records, Excel is not sufficient, and just submitting VAT returns online is not enough to be MTD compliant.

[doganjo]

https://www.tax.service.gov.uk/making-tax-digital-software?_ga=2.264505420.258647885.1630334211-718787548.1624204332

[arobwk]

You must use compatible software to keep records, Excel is not sufficient, and just submitting VAT returns online is not enough to be MTD compliant.

Oh b****r !  That means I shall have to completely redesign my accounting system.  Can anyone suggest a MTD compatible accounting application that can easily accommodate accounting for two (or more) different businesses with asset/cost sharing in some areas.  (I can do that easily with my LibreOffice spreadsheets, but I've yet to test a commercial accounts package that can.)   

[doganjo]

I've just had another look at that HMRC list - looks like one of them uses a form of Excel, so maybe you'd be Ok.  Why not ask them?

Just found this, but I think they will eventually require everyone to use an MTD compatible system.  I think you'd have to have a pretty good reason

"The government has been clear that if a business cannot go digital, it will not be required to do so. MTD is intended to help businesses get their tax right, with mandatory use of digital record keeping and using MTD -compatible software to provide HMRC updates and returns digitally.3 Mar 2021"

This explains MTD https://www.simplybusiness.co.uk/downloads/making-tax-digital.pdf

[Womble]

if you earned more than £1000 from self-employment in the previous tax year......[/b]So, for example, if you had Sales of more than £1000 in the year.....

Again though, sales (turnover), or profit?  "earned more" suggests profit. However, "sales of more than" suggests turnover, so which is it?  . Ten breeding ewes can give you more than £1K of turnover per year, but they probably won't make any profit at all!

[doganjo]

if you earned more than £1000 from self-employment in the previous tax year......[/b]So, for example, if you had Sales of more than £1000 in the year.....

Again though, sales (turnover), or profit?  "earned more" suggests profit. However, "sales of more than" suggests turnover, so which is it?  . Ten breeding ewes can give you more than £1K of turnover per year, but they probably won't make any profit at all!

This is from Investopedia - "Revenue (turnover/sales)is the amount of money a company(business)brings in from its business activities, such as from the sales of goods and services. Earnings, on the other hand, represents the profit a company has earned; it is calculated by subtracting expenses, interest, and taxes from revenue." but i think the only way to be sure is ask HMRC.  I've emailed their enquiries team - don't hold your breath