Tax on eBay earnings?

Plasticman

I'd train your wife up to do the whole thing. Best of both worlds - no tax to pay and she does all the work

Shoog

RobertoMoir wrote: »

I didn't think there was a 'line' to be crossed. You either earn an amount over your income tax allowance and it's all liable for tax, regardless of where and how it came from or you didn't earn over the taxable limit and didn't pay tax.

Doing it as a hobby 'on the side' or being a kid or being retired or anything like that doesn't enter into it.

As I understand it. There is a distinction between selling personal possessions and buying and selling for profit.

http://www.theregister.co.uk/2007/02/09/ebay_uk_traders_tax_guidance/

"As long as you are not buying goods with the intention of selling them at a profit, you are not regarded as a trader," it [HMRC guide] says. "This means you do not have to notify us and declare the income on your tax return."

Initially I was just buying a few faulty units with the intention of fixing one, for less than the cost of a new one. Once finished with the other boxes I sold them on. This was not done for profit.

I did the same for an upgrade, also not for profit.

On realising there was a profit to be made I bought a few more, etc. This is where the line was crossed, imo.

Plasticman wrote: »

I'd train your wife up to do the whole thing. Best of both worlds - no tax to pay and she does all the work

I think you're on to something, lol.

Shoog

Another related article from The Telegraph, January 2007:
http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/2802145/The-tax-sleuths-are-logging-on-to-bust-the-online-traders.html

Here's the guide which is mentioned:
http://www.hmrc.gov.uk/guidance/selling/income.htm

moneypooh

Could you not set up as a partnership instead of sole trader? Profits can be divided however you want and she could have the majority share if she was the senior partner?

RobertoMoir

Shoog wrote: »

As I understand it. There is a distinction between selling personal possessions and buying and selling for profit.

http://www.theregister.co.uk/2007/02/09/ebay_uk_traders_tax_guidance/

"As long as you are not buying goods with the intention of selling them at a profit, you are not regarded as a trader," it [HMRC guide] says. "This means you do not have to notify us and declare the income on your tax return."

Initially I was just buying a few faulty units with the intention of fixing one, for less than the cost of a new one. Once finished with the other boxes I sold them on. This was not done for profit.

ahhh learn something new every day. Fair enough!

Shoog

Any more opinions on this?

soolin

Shoog wrote: »

Any more opinions on this?

Only to say that earlier posts are quite correct in that if you buy to resell you are trading. If you are selling personal items then you are not. There is a lot of misunderstanding about 'hobby selling' but there is no such thing.

Personally I would go with it as a joint venture, do your basic accounts, you don't need anything fancy at all, then just declare half the income each. No doubt your wife will be helping take items to the PO or maybe doing the books and stock level etc, so it is quite legitiamate for her to get half the income while you do the actual physical work.

blue_monkey_2

If you are answering the email, sending the invoices, payment sare coming to you into your bank account - if you get found out then it'll be in your hands and you would be liable. It would be easy for a Tax Officer to buy something and then trace where everything has gone. It is so not worth it.

If you wife was to do the majority of the work then she could put this down to being her business. I had an eBay business (I have the same business now but website based) and in busier times my husband helped me but the business was mine, the buying was done in my name the selling was done in my name, had we done things in his name it would have bought complications with money in and out of his account.

There is no point in sailing close to the wind as if you get caught you'll be liable, so get it right now and make a clean start. Is there a reason why your wife cannot do all of the work and you sort the repairing of the goods and then she can do everything else??

She will have to register as self employed and you have to keep all of your records of paperwork, incomings, outgoings, everything has to be done right and you have to keep all records for 6 financial years. She will have to have to register everything in her name, eBay, Paypal, bank accounts, invoices for buying, etc... but she can claim part of the rent/rates/fuel bills for working from home so you might end up better off than you think by her doing this (not mortgage as it then gets too complicated when you sell so it is not worth it)

However, if you are doing all the work then yes, you would have to declare things as being yours. You'd have to do all of the above and keep proper records and do yourself assessment. If you are not comfortable doing this it means paying a bookkeeper to do it. Sometimes you have to weigh up the pros and cons. You'll need to register the business starting from your first sale.

Do not forget you'll have to report these changes to the Tax Credits people if you get them too. Do them as soon as you are registered as they backdate it and take the money back so you'll lose out there too.

And if you are selling expensive items and go over the TURNOVER (not profit) mark for VAT then you'll have to register for VAT too. It works on a roling month for 12 months so if you gove over in month 11 you cannot 'save' those sales aside for a month and you will register from that date.

You'll have to weigh up what is it is best to do really.