What is the law for selling handmade items in the UK?

A question I have been asked on many occasions is, “What is the law for selling handmade items in the UK?”

Simply Business reported that starting a craft stall was the fastest growing small business idea in 2021, so it’s an exciting time to be a part of this burgeoning sector!

Whether you want to start a business selling your crafts online, take your products on the road with a craft stall, or approach retailers about selling your crafts, you’ll need to make sure that you’re abiding by the law regarding selling handmade goods in the UK.

So, let’s keep it LEGAL! The acronym I’ve put together below is an easy to follow guide telling you what the law is for selling handmade items in the UK…

L is for Licence.

Do you need a licence to sell your handmade products online? If you are planning on selling alcohol or food products or you have a business premises that is not your home, then you might need one. Also, if you’re selling handmade items at a market, it’s worth checking whether you need a business licence using the government’s licence finder.

E is for Ensuring Compliance

Compliance with important regulations such as Product Safety Regulations cannot be over-emphasised. Your products need to be safe for your customers. 

1. FOOD SAFETY

If your handmade products are edible you must display a list of allergens, follow strict food hygiene measures and make a list of your product ingredients available to read.

2. COSMETIC PRODUCTS.

For bath and shower products you’ll need a Cosmetic Product Safety Report which is made up of a series of tests to check:

• Toxicity
• Stability and Shelf-life
• Preservative Efficacy

You can have this report created by a number of independent companies, and then keep it to hand as you could be asked to produce it by Trading Standards

3. NON-COSMETIC PRODUCT SAFETY

Product safety regulations require correct Classification, Labelling and Packaging (CLP) of substances and mixtures to be CLP compliant.

Your product labels need to disclose all the necessary information if you make candle and wax melts, reed diffusers and room sprays. If your product contains a hazardous substance, such as an essential oil or fragrance, it will need to have a CLP compliant label listing:

• Ingredients
• Hazard pictograms and statements
• Allergen information
• Supplier information

The information provided to you by your ingredient supplier, in the form of a Safety Data Sheet will tell you if there is anything else that needs to be included on the label.

It is important that you follow the CLP regulations as it is possible to make your insurance invalid if you don’t.

Make sure that your business is operating within the directives and regulation referring to the use of controlled or protected materials, or materials in limited supply which you might be using in your processes. Other laws and regulations you may also need to consider include:

• hallmarking
• fire safety regulations
• gas safety regulations
• UKCA marking(which has replaced CE marking)
• toy safety regulations

G is for gov.uk.

Go to the gov.uk website for all the detailed information you require regarding Food Safety Regulations, Product Safety Regulations and step by step advice on how to register as a sole trader or as a limited company.

A is for Act, (Consumer Rights Act 2015, Consumer Contracts Regulations 2013)

Give the right information and offer legal consumer rights to your customers.

• Write your own terms and conditions for your website if you have one (it’s important that you don’t copy and paste from someone else as they may not comply, and they won’t reflect your unique business)
• Have clear cancellation and returns policies.
• Provide accurate delivery details.
• List your business address.
• Provide acceptable proof of purchase where asked for.
• List all standard costs and additional costs.

L – is for Levy, otherwise known as TAX!

Do you need to register your business with HMRC for tax purposes?

It’s a very good idea to do so at the outset, as once your business is earning more than £1,000 annually it is a legal requirement. So, first, you need to decide whether you are going to register as a Sole Trader or a Limited Company.

What is the Law for Selling Handmade Items in the UK?

To register as a sole trader, you must be self-employed and have your own business. You don’t have to register the name you are going to trade under, but if you want to stop people from trading under your business name you’ll have to register it as a trademark.

As a sole trader you will be personally liable and you’ll have to keep a record of your business’s sales and expenses. You’ll need to file a tax return every year and you’ll have to pay income tax on your profits.

As a sole trader you’ll also need to register for VAT if your turnover is over £85,000. You can register voluntarily if it suits your business, for example if you sell to other VAT-registered businesses and want to reclaim the VAT.

If you set up as a Limited Company you’ll have more paperwork than you would as a sole trader and the registration process is slightly more involved… You’ll have to:

Choose a company name
Choose directors and a company secretary
Decide who the shareholders or guarantors are
Identify people with significant control (PSC) over your company 
Prepare documents agreeing how to run your company 
Check what records you’ll need to keep

Being a limited company does offer greater benefits to your company such as increased protection from HMRC and being classed as separate from your business means that your personal assets will be less at risk if you encounter difficulties.

The law regarding selling handmade items in the UK is, in essence, fairly straightforward and it’s all about protecting you and your customers. Fulfilling your legal obligations will give you peace of mind, in a similar way to having the right insurance, and it gives you the space to be even more creative!