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Car Insurance., When is a hobby a business wrt car insurance
rosturra
post Thu, 18 Jul 2019 - 14:52
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My brother is retired. He keeps bees as a hobby.

He sells honey. To friends or family. And sometimes at small gatherings e.g. Residents meetings / Bee Club open days etc.
Any money he makes from sales are dwarfed by costs. He may break even, on a good year.

There is a fair amount of driving involved in beekeeping; moving equipment and honey... Going to meetings, shows and conventions.

I think he gets Public Liability Insurance through his club fees. So he's fine if someone gets stung!
But I'm pretty sure he has never considered the car insurance implications

So I thought I'd ask the community. When is a hobby a business for car insurance purposes?

Now as far as TAX is involved - the rule of thumb is that you must be making £1000 a year before a hobby (or ebay trading etc) is regarded as taxable income.
So car insurance may take a similar view.

But the Inland revenue are concerned about revenue...

I guess if someone is working 40 hours a week and driving 100,000 miles a year; but his window cleaning business is making a loss.
He would still need business insurance for his van!

----------

Also:

One day a week he volunteers for a charity - teaching recovering addicts to keep bees.
He doesn't get paid; though he gets expenses.
Is that commuting?


Prompted by this post I've just googled this and found it might be an issue.
Volunteer Insurance

So I'd better have a word with him!




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post Thu, 18 Jul 2019 - 14:52
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typefish
post Thu, 18 Jul 2019 - 14:56
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QUOTE (rosturra @ Thu, 18 Jul 2019 - 15:52) *
One day a week he volunteers for a charity - teaching recovering addicts to keep bees.
He doesn't get paid; though he gets expenses.
Is that commuting?


The last time I checked with my insurance company, as long as any expenses he receives are in line with (or below) what HMRC recommend, which is 45p per mile (for the first 10,000 miles) - and he doesn't make a profit with any other expenses, then it wouldn't be seen as commuting.
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cp8759
post Thu, 18 Jul 2019 - 16:03
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I don't think what he's doing is a business at all, it's a hobby rather than something done for profit. So I don't see a need for business insurance as such.


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I am not on the "motorists's side", nor am I on the "police/CPS/council's" side, I am simply in favour of the rule of law.
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P91
post Thu, 18 Jul 2019 - 17:32
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It doesn't sound like a business but I wouldn't mix up HMRC definitions with car insurance rules. As an aside I don't think the £1000 'rule' you've quoted is correct anyway.
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Monster 900
post Thu, 18 Jul 2019 - 19:45
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Not quite the same but when I retired I carried on doing unpaid voluntary work which also needs a fair bit of driving around. I just told the insurance company exactly what I did and they said it was OK and no change to the premium.



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rosturra
post Thu, 18 Jul 2019 - 20:59
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QUOTE (P91 @ Thu, 18 Jul 2019 - 18:32) *
It doesn't sound like a business but I wouldn't mix up HMRC definitions with car insurance rules.


Yeah, I realise that would be dangerous!
I was using the tax rule as an example of a threshold.

QUOTE (P91 @ Thu, 18 Jul 2019 - 18:32) *
As an aside I don't think the £1000 'rule' you've quoted is correct anyway.

The £1000 tax free was introduced in 2018. Not sure if it got increased for tax year 2019/2020.

See this link: Do I pay tax on my hobby

In April last year, HMRC introduced a new allowance to cover “self-starters” with small, hobby-based businesses. The allowance means that the first £1,000 you earn (gross, before expenses) is tax free. You don’t have to pay anything on this income or even report it. There is also a £1,000 allowance for property income for those who let out rooms or homes.

If you earn more than the tax free allowance, you will need to register for Self Assessment and pay tax on any profits.


This post has been edited by rosturra: Thu, 18 Jul 2019 - 21:00
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roythebus
post Sun, 21 Jul 2019 - 10:26
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I'd suggest you look at ECJ rluings on this sort of matter. I've been following the case of the s19 minibus legislation currently awaiting a judicial review in the UK, but that is irrlevant to the question.

What IS relevant is the ECJ judgements. What is called "hire and reward" in this country has been defined by the ECJ as "for fiscal activity". I would suggest that anyone doing a hobby type business for any sort of financial activity would be classed as "fiscal activity".

Another ECJ ruling was under tachograph regulations. the Lindblom case, brought about by the Swedish government with a Mr. Lindblom. He's a racing car enthusiast and takes his racing car to meeintgs and races. He gets sponsorship for racing his car. He was nicked for not using a tachograph in his racing car transporter. the Swedish courts didn't want to rule on the matter so it was referred to the European court for their definition. It was judged that as Lindblom wasn't conveying the car for fiscal activity he didn't need to use a tacho. While the car was being raced he was being sponsored. He was not being paid to take it; it was his own goods he was carrying. Had he been taking someone else's car and was getting paid to do so, he would need a tacho. The same principle could be applied to someone driving a minibus. Take your own family and friends=carrying "own goods". Taking someone else=not own goods.

I'd suggest that as your brother is carrying his own goods with a view to getting some sort of reward ie getting paid for his honey in some cases, it would be better if he got business cover. I have business cover on my car which allows me to cary own goods in my car. My premium actually went down!
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rosturra
post Sun, 21 Jul 2019 - 15:33
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I've just had a look at British beekeeping association rules on their (liability) insurance schemes.

Their basic one is valid for hobbyists - which they define as having up to 40 hives. My brother has 20 or so. Which is somewhat reassuring.

Bur I also note RoyTheBus' comments.



To be on safe side...

Next time I meet bro for a pint, I will advise he phones his insurance company to confirm whether his cover includes income generating hobbies.
But obviously emphasising 'Hobby' ,'non profit making', 'volunteer'.

This post has been edited by rosturra: Sun, 21 Jul 2019 - 19:29
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stamfordman
post Sun, 21 Jul 2019 - 17:51
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The bloke with an adjoining garden at the back of us has several hives. The damn things keep swarming in our garden and I've got fed up with telling him - when I do he comes round with a box and shovels them in and takes them back 'home'.

Has he ever thanked us with a jar of honey? No. We are bee-reft.
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rosturra
post Sun, 21 Jul 2019 - 19:50
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QUOTE (stamfordman @ Sun, 21 Jul 2019 - 18:51) *
Has he ever thanked us with a jar of honey? No. We are bee-reft.


Ungrateful b**.

A swarm is harmless and will settle quietly, if left alone, and will go off of its own accord in 24-48 hours once the scouts have found a new home.

A queen and colony cost about £100. Any beekeeper will bite your hand off to take a swarm away to populate a hive.
Most beginners start with a swarm.

If I were you I'd phone the local beekeeping society, and ask for numbers of any local beekeepers. Tell them you think you have a swarm.

Then phone them rather than the neighbour the next time you have a real swarm!


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cp8759
post Mon, 22 Jul 2019 - 17:07
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QUOTE (roythebus @ Sun, 21 Jul 2019 - 11:26) *
What IS relevant is the ECJ judgements. What is called "hire and reward" in this country has been defined by the ECJ as "for fiscal activity". I would suggest that anyone doing a hobby type business for any sort of financial activity would be classed as "fiscal activity".

Fiscal activity sounds like something which may be taxed as income (or some equivalent tax). Unless you're aware of a tax on hobbies, I don't see how this could be a fiscal activity.


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I am not on the "motorists's side", nor am I on the "police/CPS/council's" side, I am simply in favour of the rule of law.
No, I am not a lawyer.
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Fredd
post Mon, 22 Jul 2019 - 17:34
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QUOTE (cp8759 @ Mon, 22 Jul 2019 - 18:07) *
Fiscal activity sounds like something which may be taxed as income (or some equivalent tax). Unless you're aware of a tax on hobbies, I don't see how this could be a fiscal activity.

Absent any explicit allowance, why would income from a "hobby" be treated differently from any other form of income for tax purposes?


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cp8759
post Mon, 22 Jul 2019 - 18:29
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QUOTE (Fredd @ Mon, 22 Jul 2019 - 18:34) *
QUOTE (cp8759 @ Mon, 22 Jul 2019 - 18:07) *
Fiscal activity sounds like something which may be taxed as income (or some equivalent tax). Unless you're aware of a tax on hobbies, I don't see how this could be a fiscal activity.

Absent any explicit allowance, why would income from a "hobby" be treated differently from any other form of income for tax purposes?

If costs always exceed, or at best match income, there would be no tax liability. HMRC would not expect you to declare anything which isn't done for the purpose of generating a profit and has no prospect of doing so. It's the same as selling old stuff out of your loft on ebay, it doesn't fall into taxable income at all and does not need to be declared anywhere.


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I am not on the "motorists's side", nor am I on the "police/CPS/council's" side, I am simply in favour of the rule of law.
No, I am not a lawyer.
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DancingDad
post Tue, 23 Jul 2019 - 09:21
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I'm not sure that I am happy with the idea that if it makes no profit it is not a business.
That would put many firms, companies, football teams into the realms of hobbies.

Something like bee keeping, a few hives on your own land and maybe a few placed without charge on local farms so the bees can do their stuff, hobby.
Once money changes hands, hives are being placed to order etc, it is a business.

Personally I would discuss with car insurance regarding business use.
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SurreyNorthern
post Tue, 23 Jul 2019 - 14:06
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QUOTE (DancingDad @ Tue, 23 Jul 2019 - 10:21) *
I'm not sure that I am happy with the idea that if it makes no profit it is not a business.
That would put many firms, companies, football teams into the realms of hobbies.

Something like bee keeping, a few hives on your own land and maybe a few placed without charge on local farms so the bees can do their stuff, hobby.
Once money changes hands, hives are being placed to order etc, it is a business.

Personally I would discuss with car insurance regarding business use.



Business use is a funny thing.

Years ago, I had a prang on my way to work.

At the time I was on a limited period 'contract'. Home in North Derbyshire, office in Chiswick,so I'd drive down on a Monday morning, and drive back Friday night.

Cover was under SDP and commuting. The ins co insisted that I should have been covered under business use, and i wasn't, and that 'commuting' wasn't covering depite me commuting to a permanenent (for 6 months) place of work. I argued otherwise. They then moaned about where the car was parked nightly. It was on-road, and they bitched and moaned that it should be parked in Derbyshire nightly. Eventually, they 'paid out as a goodwill gesture', and I promptly insured as with business cover.

The point I'm longwindedly making, is that check with the ins co. The business cover was 20 quid extra for me at the time -undoubtedly more now....
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rosturra
post Wed, 24 Jul 2019 - 10:26
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QUOTE (SurreyNorthern @ Tue, 23 Jul 2019 - 15:06) *
It was on-road, and they bitched and moaned that it should be parked in Derbyshire nightly.


Well they had a point. You had insurance priced on a Derbyshire address, yet four nights in seven it was parked on a London Street!

This post has been edited by rosturra: Wed, 24 Jul 2019 - 10:27
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cp8759
post Wed, 24 Jul 2019 - 10:27
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QUOTE (DancingDad @ Tue, 23 Jul 2019 - 10:21) *
I'm not sure that I am happy with the idea that if it makes no profit it is not a business.
That would put many firms, companies, football teams into the realms of hobbies.

I think you'll find the Articles of Association of those firms, including the loss-making football clubs, overtly state that the raison d'etre of those firms is to make a profit.


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No, I am not a lawyer.
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DancingDad
post Wed, 24 Jul 2019 - 10:37
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QUOTE (cp8759 @ Wed, 24 Jul 2019 - 11:27) *
QUOTE (DancingDad @ Tue, 23 Jul 2019 - 10:21) *
I'm not sure that I am happy with the idea that if it makes no profit it is not a business.
That would put many firms, companies, football teams into the realms of hobbies.

I think you'll find the Articles of Association of those firms, including the loss-making football clubs, overtly state that the raison d'etre of those firms is to make a profit.

Certainly do not dispute that.
Was just pointing out that making money or not is not the sole criteria.
Asking for money is probably a better dividing line.

For instance, I may find laying bricks is very therapeutic and to satisfy my urge, volunteer to go and work on a local building site, without pay.
That is a hobby.
But if I did the same amount of work on that building site for payment, that becomes a business.
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