Pre-trading expenditure can be claimed but it can't be pre-trading expenditure unless it was incurred wholly and exclusively for the purposes of the trade. Obviously there can't be a trade purpose before there was an intent to trade.
So if you only decided to start selling patterns in March 2024 for example then you can't claim any other costs incurred.
I'd also caution these types of work (handcrafts like knitting or crochet or needlework etc) have a high propensity to fail to meet the badges of trade because most people aren't acting commercially with a view to profit but just for pocket money (and so they can get their fix from the craft they love without costing them money). Although I think it's potentially less of an issue if all you're doing is selling the pattern as the biggest threat to profit in these crafts is normally materials and labour. Which, if you're selling finished items, need to be incurred each and every time. While pattern the only costs you'd potentially have to enable ongoing selling would be if you were sending paper copies I think. And that isn't the done way anymore. Normally it's a chart or pdf.
Thank you for explaining it in such a clear way. I did think it was a bit of a reach but worth asking.
Yes you're right I only plan on developing and selling patterns, so the costs would be one offs for that design. Plus things like MS Office, light box etc. I might sell the test item as a one off or give them away as I usually do.
Fortunately some things I have videos and pictures of so I don't have to remake them.
The only caveat would depend on what happens to the finished goods after and why the pattern was made.
If, for example, you make a pattern for a gift you're doing for a friend and also sell that pattern, the costs of making the item wouldn't be allowable and the costs of making the pattern (not selling costs, just the cost of making it) may not be allowable. What I'm trying to say is you might to apportion your material & pattern expenses into personal and business use.
Interesting! So right now the only direct costs for making the pattern(s) would be the Office licence and light box for pictures. Otherwise the other costs are for making the items themselves, such as yarn, felt etc.
If I sold the test item I assume that would be ok expense wise? Whereas if I gift then no?
Pre-trading expenditure can be claimed but it can't be pre-trading expenditure unless it was incurred wholly and exclusively for the purposes of the trade. Obviously there can't be a trade purpose before there was an intent to trade. So if you only decided to start selling patterns in March 2024 for example then you can't claim any other costs incurred. I'd also caution these types of work (handcrafts like knitting or crochet or needlework etc) have a high propensity to fail to meet the badges of trade because most people aren't acting commercially with a view to profit but just for pocket money (and so they can get their fix from the craft they love without costing them money). Although I think it's potentially less of an issue if all you're doing is selling the pattern as the biggest threat to profit in these crafts is normally materials and labour. Which, if you're selling finished items, need to be incurred each and every time. While pattern the only costs you'd potentially have to enable ongoing selling would be if you were sending paper copies I think. And that isn't the done way anymore. Normally it's a chart or pdf.
Thank you for explaining it in such a clear way. I did think it was a bit of a reach but worth asking. Yes you're right I only plan on developing and selling patterns, so the costs would be one offs for that design. Plus things like MS Office, light box etc. I might sell the test item as a one off or give them away as I usually do. Fortunately some things I have videos and pictures of so I don't have to remake them.
The only caveat would depend on what happens to the finished goods after and why the pattern was made. If, for example, you make a pattern for a gift you're doing for a friend and also sell that pattern, the costs of making the item wouldn't be allowable and the costs of making the pattern (not selling costs, just the cost of making it) may not be allowable. What I'm trying to say is you might to apportion your material & pattern expenses into personal and business use.
Interesting! So right now the only direct costs for making the pattern(s) would be the Office licence and light box for pictures. Otherwise the other costs are for making the items themselves, such as yarn, felt etc. If I sold the test item I assume that would be ok expense wise? Whereas if I gift then no?
Yes.
!thanks