ebay & declaring tax

rushnowt

Again apologies if this has already been asked and answered. I did search but i keep getting an error message

Anyway, what i'm curious about is declaring earning to the tax office. during a discussion with a mate, I mentioned that i was thinking of selling off a lot of my kids clothes, ya know what it's like with kids, ya usually buy too much, they never wear it or at least hardly wear it and before ya know it ya house looks like a local boutique

My mate said that i would need to declare this to the tax office my argument was that i'd paid full price for these items, some of which cost quite a bit of money. How can it be wrong to try to claw back some of that money by selling them off cheaply and seeing them go to a good home. Tbh iv'e always given everything to charity in the past or at least passed them on to friends of mine. Now i'm thinking i may as well make a bit of money by selling them, surely this is not taxable. I can see that some may see it as earnings but if i've already paid for the items and selling them on again at a loss, can this be considered as earnings

Thanks in advance for your advice/opinions x

jenniferpa

This comes under the category of pre-owned chattel http://www.hmrc.gov.uk/poa/poa_liable.htm#chattels

Essentially no, you are not liable for tax on that income. It would be different if you were buying items (used or new) for the purposes of resale.

soolin

selling your own goods does not require you to pay income tax. If you sold enough then you would be subject to capital gains tax, but in reality that is virtually never going to apply due to the high limits.

Soo

Hintza

soolin wrote:

selling your own goods does not require you to pay income tax. If you sold enough then you would be subject to capital gains tax, but in reality that is virtually never going to apply due to the high limits.

Soo

I disagree Soo you can not be liable for CGT if you are selling items for less than you pay for them. There is no gain.

JohalaReewi

Basically.

1) If you sell your own stuff (ie, you bought it and used it, and are now selling it on) then this is not income so it is not subject to income tax. If you just buy stuff to sell on (without using it), this is trading and is subject to income tax (and NIC, and VAT if your turnover is high enough).

2) However, If you sell your own stuff it might be subject to capital gains tax. Check out HM quick info here...

http://www.hmrc.gov.uk/leaflets/cgtfs1.htm#b8

You are not going to have a problem with your childrens' old clothes.

Other forum topics which have covered this recently...

http://forums.moneysavingexpert.com/showthread.html?t=205992
http://forums.moneysavingexpert.com/showthread.html?t=204614

JohalaReewi

soolin wrote:

selling your own goods does not require you to pay income tax. If you sold enough then you would be subject to capital gains tax, but in reality that is virtually never going to apply due to the high limits.

Soo

You have sell enough qualifying items! Any personal effect worth less than £6000 is under the capital gains tax radar and does not count. Can't see many people getting over £6000 for stuff sold on Ebay.

JohalaReewi

Hintza wrote:

I disagree Soo you can not be liable for CGT if you are selling items for less than you pay for them. There is no gain.

Unfortunately, CG tax could work on the basis of worth not what you actually made or lost (if the IR think you are selling it for less than its real value).

check out (second sentence)...

http://www.hmrc.gov.uk/leaflets/cgtfs1.htm#b2

crutches

if i buy wholesale (big family!) and then sell the new clothes in the bundle that dont fit my kids.(say 1 or 2 items out of 10).where do i stand for tax?

Hintza

crutches wrote:

if i buy wholesale (big family!) and then sell the new clothes in the bundle that dont fit my kids.(say 1 or 2 items out of 10).where do i stand for tax?

You will know the answer to that, if you are trading you are liable. I assume that it only happens occasionally then I wouldn't worry but if Taxman comes knocking you might have to explain your actions.

If you were doing it 2-3 times a year you would be OK but if you were doing it 2-3 times a month he night be interested.

zappahey

JohalaReewi wrote:

Unfortunately, CG tax could work on the basis of worth not what you actually made or lost (if the IR think you are selling it for less than its real value).

check out (second sentence)...

http://www.hmrc.gov.uk/leaflets/cgtfs1.htm#b2

But, to be liable for CGT, that "worth" still needs to be significantly higher than the value of the goods when you bought them. If you're selling off your used odds and ends then that's highly unlikely, so CGT would not apply.

jessicamb

The income tax issue revolves around the badges of trade - basically a set of tests the IR apply to see if you are trading or not.

These are:
A Profit Seeking Motive
Frequency and Number of Similar Transactions
Modification of the asset in order to make it more saleable
Nature of the Asset
Connection with an existing trade
Financing arrangements
Length of ownership
existence of a sales organisation
reason for the acquisition/sale

Selling second hand items like childrens clothing doesnt appear to indicate trading