PTC - identifying a trade

carla030698 Registered Posts: 112 Dedicated contributor 🦉

I am taking PTC and BTC next week :crying: and am just about prepared for most of it but have come across something I havnt really prepared for!

If a person has a hobby of fixing cars for friends and family and only charges for parts to cover his costs, is this taxable?

I would say not, as he is not making a profit and he is not actively advertising the fact he is fixing cars.

Any thoughts????


  • Bookworm55
    Bookworm55 Registered Posts: 479 Dedicated contributor 🦉
    I would say that, on balance, he probably isn't self-employed and the car repairs are just a hobby. It does depend how much time he spends on it. Also, if he's just charging the cost of parts, he's probably making a trading loss anyway.

    But since it is an exam question... I would talk about the Badgers of Trade which you can read a summary of on the HMRC website:

    Talk about as many as you can (both for and against) and make a judgement call. The closer you think it is, the less likely you'll be penalised for making the 'wrong' call.

    The two most relevant here are
    2/ Frequency of transactions- if he does it a lot, the car repairs could be seen as a trade
    4/ Similarity to other trading activities- if he's also employed as a mechanic, these repairs would be more likely to be considered a trade. If he isn't, they aren't.
  • carla030698
    carla030698 Registered Posts: 112 Dedicated contributor 🦉
    Thanks, thats what I thought, and the link is a great help!
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