This is a little bit different to the child actors earning money.
Etsy is like a big online craft fair where people from all around the world can buy and sell unique, often handmade or vintage items. It’s like an online marketplace that’s special because it focuses on unique, creative goods, much like the things you might find at a local art fair or antique shop.
Just imagine walking into a bustling craft fair, where artisans showcase their beautiful, handmade crafts, jewellery, clothing, and other special, often one-of-a-kind items. Now, imagine being able to visit this craft fair from the comfort of your own home, any time you want, day or night.
What we have found is that children are creating work and then selling it, and as it is crafting, the most appropriate platform is Etsy. So the income belongs to the child right?
Wrong!
Etsy won’t let anyone under the age of 18 set up an account, so the parent has to set up the account under their name as the adult. But the income still belongs to the child right?
NOPE
HMRC treats it as the adults’ income as the account is in the name of the adult, so the adult has to declare it on their tax return.
This is not a problem if the adult does not have any self-employment as you can earn up to £1000 per tax year without having to tell HMRC. But if the adult is self-employed, no matter what the earnings on Etsy are, it needs to be on that adult’s tax return, and that adult pays tax on it, and oh my that could be at 40% and as it is treated as the adults’ earnings, maybe VAT as well.
So what starts to be a child’s hobby can turn into an adult’s tax nightmare. We don’t want to discourage creativity or entrepreneurship, but now you know this, if there are two adults attached to the child, put the Etsy account in the lower-income adults’ name.
The hard part is how to tell the child that they may loose some of their income to the tax man. Oh well, never too early to start that element of disappointment in life!
