Tax liability when selling on ebay -any advice please

matthwnm

Hi all

I have for some time sold ( and bought) the odd item on ebay, around 80 transactions in 4 years.
But now I want to buy items wholesale and sell for profit. Have done research to find what I can sell and where I can get it wholesale.
I'm not planning on making thias my main business, I'm a full-time employee and expect to continue being so. I'm going to sell as a private individual and would hope to take say £100 - 400 per month (please ) as a bit of extra money.

What taxes will I be liable to - I guess I won't make enough to be liable for VAT.
Income tax? On the turnover or the profit?
National insurance?
Anything else?

How do I go about paying these (don't really want my "day job" to know about my sideline, it's none of their business!

Thanks for any help.
Matthew

baffcat

Hi Matthew

If you're going to sell on ebay, as a business, you need to tell your local tax office within 3 months of doing so. They'll probably send you monthly invoices for £24 or so for National Insurance purposes.

It's best to have a chat with a local accountant. He'll fill you in on what paperwork you'll need to keep, such as invoices from your suppliers, ebay invoices, paypal fees, packing costs, postage receipts, etc. He'll want to know what you expect to turn over (guess) and a record of your sales. His advice and fees will be minimal on your expected turnover. Get someone to refer you to their accountant, if they're happy with them. Recommendations are always best.

You'll only pay tax on any profit you make, not on turnover. So you'll be taking off all the costs I've listed above, and possibly others, from your sales, to give you your gross (before overheads)& net (after overheads) profits.

You'd only need to register for VAT if you expect to turnover £61k or so (I think it's £61k, might be £60k or £65k now). You can, however, elect to voluntarily register for VAT, but Customs & Excise, or whatever they're called now, are cracking down on small traders for VAT.

The tax man won't want/expect you to pay monthly, but you will need to fill in a tax return (that's why you'll need an accountant) to show what you've actually made.

A final piece of advice: Always put aside a sum of your profits that you can get to when your tax bill comes in. It's bloomin' horrible trying to find a largisg sum of cash at the last minute, from your wagers or latest turnover.

Beyond all that.... have fun. I finally gave up my job at the beginning of the month to sell (mainly on ebay) full time, after six months of doing what you intend doing - using it as a second source of income, and it's so nice working when I want to.

Good luck.

Baff

martindow

I would contact your local tax office - I have found them very helpful. You should tell them anyway if you are going to be partly self employed. You need a much greater turnover than you anticipate to have to deal with VAT - £66,000 this financial year. You will be liable for tax on any profit you make so you subtract your expenses from any turnover. Make sure that you keep receipts for anything and careful records of income in case they decide to check up on you. You also need to keep records of business mileage - going to the Post Office for instance as you can claim for that at a rate of 40p per mile. I imagine you can also claim as expenses a proportion of computer costs, broadband connection, etc. You just need to be able to justify anything you claim. It may be worth going to see an accountant with a list of questions. Many of them offer initial free half hour sessions.

rushnowt

when you send your forms in to register as self employed they may contact you and ask if you'd like to go along to one their courses to give you help and advice with what you can and cant claim for etc, if not ask if they still do them, they are very informative, free and your given advice on stuff that theres no books or brochures on.

the IR will except simplified accounts on turnover of less than £15,000 per year, in my experience they are more than happy to help and will advise as and where they can, theres just the odd jobs worth lol

you can claim a % of any rooms in your house you use for business/heating/phone etc, it can be quite difficult to work out tho but if the course is still available it will explain everything in better detail for you and you dont necessarily need an accountant, i've been self employed for years and have never needed an accountant

good luck

FloFlo

Hi, I have registered as self employed for my ebay sales but I have a question does my house insurer and mortgage provider need to be informed that I am selling from home.

rushnowt

not sure about mortgage and not sure what to suggest as regards that, your insurance co does need to be advised and stock on your premises has to be insured, not all insurances companies except you if your using your home for business purposes, it all gets a bit confusing tbh. another thing to consider is if your using your vehicle to transport packages to PO or to go to buy stock etc when registered as self employed you also have to notify insurance company of change of use from private to business if you want to remain legal, all starts getting a bit rocky when you look at everything fully

agness_3

You can apply for a Certificate of Exception if you expect your earnings from self employment to be less than £4300 for the tax year. National insurance is different from tax in that each source of income is treated separately. You will need to pay tax at basic rate on all profit from self employment as you are already using your allowances on your full time employment.

FloFlo

If the full time employment is taking up the tax allowances wouldn't this be the same for NI. I have the certificate for exemption but I am a student so my only earned income is from ebay but I assumed if I worked and earned over the NI limit £4300 I would then have to pay NI on my ebay profit.
Very informative thread.

syanide

sell as a sole trader and keep all trading records.

matthwnm

Thanks everyone so much. This really has more helpful than the hours my partner and I have spent trying to find info on internet; even the IR website wasn't very helpful really.

Once agin thanks, and good luck fellow ebayers / MSEers

Matthew

martindow

Following FloFlo's point about insurance and mortgage issues is there a potential problem with Council Tax and Business Rates if you claim a proportion of household expenses as business expenses?