Writing Hobby or Writing Business?

Writing Magazine – February 2025 (c) Simon Whaley

Simon Whaley ponders the conundrum about when a writing hobby becomes a writing business

Have you ever wondered when our writing hobby becomes a writing business? Is it when we win a small writing competition and bank the £25 cheque? Is it when we have a letter published in our favourite magazine and win a small prize? Or is it when we sign a publishing contract with one of the top five traditional publishing houses?

My writing began as a hobby. I first dabbled with writing stage plays and scripts during my teen years, after school and at weekends. When I started work, having done a full nine-to-five (and often longer) day in the office, I would come home and write in the evenings.

Then I sold my first piece. It was a word search puzzle, for which I received a £3.50 postal order. Already, I could sense HMRC rubbing their hands with the excited anticipation of taking their slice.

Hobby Hours

According to the Oxford English Dictionary, a hobby is “an activity done regularly in one’s leisure time for pleasure.” Well, that summed up my writing. But had something changed now I’d sold some of my work?

Doing something as a hobby does not mean we take it less seriously or are less professional in our approach. Prior to the 1980s, all Olympic athletes had to be amateurs. Those pre-1980 gold medal winners, deemed the best in the world, were amateurs. It was only since 1986 that the International Olympic Committee permitted professionals to be part of their national teams.

My dad worked as an engineer during his career, but enjoyed photography as a hobby in the evenings and at weekends. However, he often struggled to get amateur insurance cover for his photographic equipment because insurers believed no amateur could have as much equipment as he had.

Classifying our writing as a hobby does not diminish our work or our attitude towards making it the best we can.

Conversely, that doesn’t mean work written outside of office hours cannot be a writing business. Anthony Trollope famously wrote for three hours in the morning before going to work. He worked for the Post Office from 1834 to 1867, and he all six of his Barchester novels were published during his last twelve years as a Post Office employee.

I became a full-time writer in 2004, but for ten years prior to that, I was both employed and self-employed. Although I still felt my writing was a hobby, it was also my side hustle because I was earning more than the Trading Allowance.

Competition Conundrum

Writers who focus on entering competitions might consider their writing is a hobby. After all, prize money is tax free, isn’t it?

Actually, it most cases, no.

HMRC typically considers prize money from unsolicited competitions as potentially exempt from tax. The most famous unsolicited writing prize is probably the Nobel Prize for Literature.

Therefore, entries are solicited if the writer (or their publisher or agent) has actively submitted their work to a competition, hoping to win a prize. HMRC usually assesses prize money awarded as a professional receipt when the entrant has won the prize through their skill and literary merit. In other words, if winning a prize wasn’t determined by a lottery.

The silver lining is that if prize money is a taxable income, then entry fees are a legitimate business expense that can be set off against any taxable income.

Income Indicator

Does this mean that it is income that separates those writing for pleasure from those running a writing business?

Not necessarily, although income may help clarify a difference. That’s because it’s possible for writers who treat their writing as a hobby to earn some money from their words with no need to complete a tax assessment.

HMRC introduced the Trading Allowance in 2017. This reduced the need for people to complete a tax return if they were making a small amount of money from trading activities, such as selling items on online auction sites, raising some cash by selling unwanted goods at a car boot sale, or babysitting for neighbours.

The Trading Allowance only applies to individuals and currently has a value of £1,000. It only becomes necessary to complete a tax return once people have generated an income figure greater than this in the same tax year.

Writers who win the occasional competition, sell a couple of articles or short stories to a magazine, or who self-published books can use this trading allowance, and don’t need to inform HMRC if they stay within this £1,000 limit. Therefore, it’s possible to think of yourself as someone who writes for a hobby, and occasionally sells some of your work, without the need to inform HMRC.

Business Behaviour

Are you keeping any records? Even if you think of your writing as a hobby that sometimes brings in some useful cash, you still need to take a business-like approach. The HMRC website makes it clear. “You must keep records of this income.”

This is because HMRC could make enquiries. It will be much easier to answer questions if you can prove you’ve kept records showing how much you’ve earned from your writing in any year, even if it is below the current trading allowance threshold.

Once any writing income exceeds the trading allowance, it is then your responsibility to register with HMRC as self-employed and complete a tax return at the end of the financial year. It is only by keeping records you’ll know when you’re getting close to the allowance limit.

Keeping records needn’t be taxing. A spreadsheet works well, but all you need is a notebook to jot down the information. Record the date you received the income, who paid you, how much they paid, and what piece of writing it was for. Ideally, it will be useful to record which rights you granted them in that work.

Another Account

Another useful step to take is to open a separate bank account. Even if you think of your writing as a hobby, keeping any writing income separate from your normal day-to-day banking makes everything easier. Not only does it make completing a tax return easier when you get to that stage, but it’s a simple way of keeping track of how much income your writing hobby has generated since the start of the financial year.

Most banks’ terms and conditions don’t allow customers to use a personal account for business purposes. This shouldn’t be a problem for those who treat their writing as a hobby and are only using their trading allowance.

Once your writing income exceeds the allowance and it’s necessary to register with HMRC as self-employed, that’s a sensible time to open a dedicated business account.

Thankfully, as writers, we operate as sole traders, rather than partnerships or limited companies, so there are no official forms to complete when setting up ourselves in business. Similarly, there’s no need for us to open a business bank account that incurs charges. There are several banks that offer business bank accounts for sole traders that don’t charge for day-to-day transactions. These include Starling Bank, Monzo, Revolut, and Virgin Money.

Free Funds

Hobby writers who see their work in print, or self-publish their writing, may be eligible for free money. What triggers eligibility is not whether the writer is running a business or write as a hobby, but whether they’ve been published.

Once our writing has been published in a magazine with an ISSN (International Standard Serial Number), we should join the Authors’ Licensing and Collecting Society (ALCS). This organisation collects funds from educational establishments, government agencies, and the private sector in return for photocopying licenses.

Receiving payment from the ALCS does not mean our work has been photocopied. It merely acknowledges that our work is available for photocopying, which entitles to a share of those funds.

Similarly, writers who self-publish their books with an ISBN (International Standard Book Number) can register for Public Lending Right (PLR). This scheme monitors both print and ebook borrowings from public libraries over the course of a year and then pays authors a share of the PLR fund, depending on how many times their book has been borrowed.

Again, writers qualify by having a book published with an ISBN. It has nothing to do with whether their writing is a hobby or a business.

Copyright Catch-all

Something else that doesn’t discriminate is copyright. You don’t have to be running a writing business to benefit from copyright. Copyright applies to everyone. Once you express an idea in a fixed form, like writing it down on paper or creating a computer file, copyright automatically protects it. Nobody else should use your words without first gaining your permission.

That copyright lasts for another seventy years after we die. Even if you consider your writing a hobby that you do purely for pleasure and you share it with no one, copyright still protects it. Your family could still monetise it after you’ve died. They could still turn your writing into a business. Which is why every writer should stipulate clearly in their wills as to whom they’re leaving their copyright.

Ultimately, even if you think of your writing as a hobby, it’s worth taking a businesslike approach to it at all times. Perhaps the only distinction separating those who think of themselves as hobby writers compared to those running a writing business is that hobby writers don’t need to worry about making a profit from their writing.

In some ways, every writer is running a writing business. But it should always be remembered that how they run it, and what they do with it, is entirely their business!