Underwood Lamb
Call us01275 332612
Email: enquiries@ulco.com 

Search


A reminder – HMRC’s badges of trade
23/12/2021

The 'badges of trade' tests whilst not conclusive are used by HMRC to help determine whether an activity is a proper economic trade / business activity or merely a money-making by-product of a hobby.

The approach by the courts in using the badges of trade has been to decide questions of trade on the basis of the overall impression gained from a review of all the badges.

HMRC will consider the following nine badges of trade as part of their overall investigation as to whether a hobby is actually a trade:

  • Profit-seeking motive
  • The number of transactions
  • The nature of the asset
  • Existence of similar trading transactions or interests
  • Changes to the asset
  • The way the sale was carried out
  • The source of finance
  • Interval of time between purchase and sale
  • Method of acquisition

Even if HMRC consider that the activities in question are a trade, taxpayers can make up to £1,000 per year tax-free by claiming the trading allowance.


Contact Us

Ground Floor, The Old Barn
Lady Farm, Chelwood
Bristol 
BS39 4NN
 

 

Legal Text

Membership

 

 

Newsletter Sign Up

With our newsletter, you automatically receive our latest news by  e-mail and get access to the archive including advanced search options!

Newsletter Sign Up  |  Login

Free no obligation meeting

Call us on 01275 332612
or Email  enquiries@ulco.com