Have Fun - And Save Tax at the Same Time

Have Fun - And Save Tax at the Same Time: "Have Fun - And Save Tax at the Same Time


For the Summer, we thought it might be fun to have a quick run down of the various ways in which leisure and enjoyment can impact on tax – and provide opportunities for saving it!
Hobby or Business?
There are very few hobbies which are absolutely free, and it would be nice, wouldn’t it, if we could somehow get tax relief for what we spend on our leisure time activities? That might just be possible in some cases, because there are a lot of situations where a hobby merges into a business activity.
Take the example of someone whose hobby is restoring old furniture. It may start off being purely done for his own benefit, so as to be able to fill his house with beautiful things. But it can develop into something more, if a friend asks him to do something and insists on paying him for it. Immediately the cost of the tools, lathe etc in the garage, the purchase of French polish, even repairs to the workshop itself, become allowable expenses.
The most common example of the “grey area” between a hobby and a business, of course, is farming. So much so, that there is a whole set of rules devised by the Revenue to prevent individuals getting loss relief for “hobby farming”, which inevitably, of course, tends to show a loss every year.
But the fact that these rules are necessary for farming shows that it is by no means impossible for an activity that shows regular losses to be treated as a trade within the scope of taxation, and therefore available for relief. What you have to show is that there is a “reasonable expectation of profit”, but the Revenue’s own internal manuals make it clear that this need not be an expectation of profit this year: merely an expectatio"