Folksy Ltd

Tax/insurance? Help please

Hi, I have just logged on for the first time and I am thinking of selling some of my homemade crafts on here and some other sites. I have never sold anything before. Was just wondering how it works in terms of tax etc. Do I need to let HMRC know straight away that I am selling stuff? And do I need any kind of insurance?

Thanks

Hi MoyesRolley!

I used to work in insurance and can advise you that there is no legal or contractual requirement that you have public liability insurance to sell on Folksy.

Some people keep public liability policies for a couple of reasons. The first is that they do craft fairs (outside of Folksy) and the fair organizers insist on insurance as part of the contract they sign to take part in the fair. The second reason is that some makers are more cautious than others and want to protect themselves in case somebody injures themselves using one of their products and makes a claim for compensation.

I personally do not carry public liability insurance because I think that it is frankly money for old rope. Unless your product is high risk like cosmetics, food, or children’s toys then it is hard to imagine how an adult could injure themselves whilst using anything on Folksy properly.

Some may come back and say “But what if they are using it improperly?” In this country (the UK) it is still the case that if your adult customer uses your product in a silly way, then they cannot claim if they are injured by it. This may be different to the situation in the US, and the horror stories from across the pond probably account for the way many people feel about insurance being necessary or advisable.

Really you have to make the decision yourself based on how happy you are to take the risk of being claimed against. I have been on Folksy for several years now and have never had anyone claim against me. You would also have to increase your prices in order to take account of the money you pay to the insurance company in premiums.

As far as tax is concerned, you should notify HMRC if you are earning money through Folksy. Do not expect them to be very interested if you are earning less than the £11,000 threshold, though. The tricky part is if you have another job, your earnings from Folksy need to be added to your income from the other job and that could, in some circumstances, push you up over the threshold and you will be taxed then on your sales. i’m not sure what the rules are for people in receipt of benefits, but I can imagine that there may be some effect on those too, if a seller was making a lot of money. The Citizens Advice Bureau could tell you much more about this if you wanted to know.

That’s about all I can think of at the moment,

Sam x

2 Likes

Hi Sam. Just out of interest, if you sell to the US, would you recommend getting public and product insurance, because they’re generally more litigious? My question doesn’t really apply to me, because I sell on another marketplace where you have to have insurance in order to sell on there, but I’d be interested in hearing your thoughts

1 Like

Hello :slight_smile:

Re: HMRC, you need to register on the .gov.uk website as self employed after you set up. You can find more information here:

https://www.gov.uk//working-for-yourself

It’ll mean you need to fill in a tax return each year but if your turnover is low, it will be straightforward. It will calculate how much tax and how much NI you’ll owe as part of it.

1 Like

That’s a very interesting question. I do sell on other platforms and have sold to the US before. It would depend on what you are selling. My jewellery conforms to traditional techniques and designs, so it is low risk, but if you were selling something a bit more “unique” then, yes, I would be more cautious about that market. But then, would the policy cover the cost of US claims? You would need to check the small print of the policy very carefully, because a lot of insurers would seek to avoid that risk.

Sam x

Yes you need to register with HMRC and fill in a self assessment form every year…even if you are well below the taxable level. I have had to do it for years even if I only sold a couple of items. Some people think you don’t have to, but that is a risk have to decide on …I am lucky to have an accountant who does this for me…and I have never had to pay tax but I still have to do it…

1 Like

I believe there is a new rule that allows you to make £1000 before you have to register with HMRC - I was already registered as I have been self employed for many years so I could be wrong about this.

As far as insurance is concerned - I have it simply because I need it for craft fairs and also because I get it for free with membership of the International Felters Association which I belong to! Important to note though that it does not cover me for the USA. If you want to have insurance to sell to USA then just make sure you read the small print of any policy as I believe a lot of them have it as an exclusion.

1 Like

Thanks everyone.

Thanks for your reply. Yes, my insurance does cover the cost of US claims :slight_smile:

1 Like

This is the link to set up as a “sole trader” ie self-employed.

It states:
You need to set up as a sole trader if any of the following apply:

  • you earned more than £1,000 from self-employment between 6 April 2017 and 5 April 2018
  • you need to prove you’re self-employed, for example to claim Tax-Free Childcare
  • you want to make voluntary Class 2 National Insurance payments to help you qualify for [benefits]

You would need to keep records of your self-employment transactions so you can show HMRC you haven’t earnt £1000, or when you have gone past that, you can fill out your Tax Return.

2 Likes

That’s good! Out of interest, who do you use?

Sam x

I have never made more than £1000 in a year but have always had to declare and fill in forms…I am lucky that my accountant does it for free for me but said he is hoping that HMRC see sense and tell me that I no longer need to do it…He said that I cannot just stop filling in the forms , it needs to come from them…so I have just sent off my details …here’s hoping that they let me stop doing it now…such a waste of precious time.

I’ve been browsing to find out more about tax and insurance and was interested to see that you don’t need to register as self-employed if you earn less than £1,000 in the tax year. As I don’t expect to earn that much before next April I may start selling sooner than I had planned!
This is a great forum - thank you for all the help for a newbie!
Kath