When do ypu have to pay tax?

Joeyjoe_2

Hi, i have been doing ebay a while and sell for friends etc. I was just wondering at what point do you have to pay tax?(sorry i spelt you in the title wrong!)

Crowqueen

If you are just selling your own possessions then you don't have to pay tax at all, unless you make enough money to be considered for Capital Gains Tax.

If you are acquiring items to sell on, then you start to come under the business rules. Generally speaking, I would be wary of selling for friends for a variety of reasons:

- they might not be as good at deciding whether their items are in good enough condition to sell, or will fetch prices that they will be happy with, leaving you with the fallout on your account if they mess up. People can be surprised what something is worth (both pleasantly, and, more importantly, unpleasantly) and so if the item that they feel is worth £10 only sells for £2 they may choose to withdraw it and leave an unhappy bidder refusing to cancel a transaction, sticking you with a neg and fees. I'm sure you're aware of this pitfall already though - but this is why, despite being asked a couple of times, I won't sell for friends on my own account.

- if you are taking a cut or buying the items from them to sell on with the intention of making a profit, legally speaking you are trading (they are paying you a wage to sell their items, essentially "selling" your time) and so you need to be registered as a business as this is pretty much the legal definition of business-selling. So yes, you have to pay tax, register as a business and adhere to consumer regulations. Just for your mates' items, this isn't worth it (lots and lots of regulations out there!) but you could possibly then expand into a comfortable business for your own gain on the back of these sales, which would be worth your while.

- if you are literally taking their items and selling and giving them all the cash, you are paying out in fees etc., and it is costing you to do this, so you should really be getting something from them to do it. Which takes us back to point 2.

I'm not saying don't do it but you have to be jolly careful as the law states "acquiring to sell on", so even if you are getting the items for free and making 100% profit you are still trading. I would get your mates to sell their own items themselves.

Joeyjoe_2

Thanks for the reply. Sorry if i am slow on the uptake but bear with me......... So i have sold maybe 3 or 4 grands worth of items in the past year( i sold all my retro gaming classics and tv etc etc) will ebay not tell me i need to become a business member and pay tax or can the taxman not get hold of this info?

Crowqueen

Joeyjoe wrote: »

Thanks for the reply. Sorry if i am slow on the uptake but bear with me......... So i have sold maybe 3 or 4 grands worth of items in the past year( i sold all my retro gaming classics and tv etc etc) will ebay not tell me i need to become a business member and pay tax or can the taxman not get hold of this info?

No. If they are your own possessions, eBay/HMRC won't care about how much you've made. The threshold seems to be £6000 on one item.

Here's the relevant page: http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm

Joeyjoe_2

I just read the capital gains website and you can sell your possessions of the value upto 6,000 and your ok. Hope i have read that right!

Crowqueen

Yup - took the words right out of my mouth.

theonlywayisup

Being a business in ebay terms and in line with HMRC are not the same. Ebay will make their own mind up when you need to change registration. However, it is simple for HMRC, if you buy or make in order to sell, you are a business.

As for tax, as per CQ above. Ebay do not involve themselves in your tax issues other than to liaise with HMRC if requested by them.

Joeyjoe_2

Your a star! Thanks for your help, looked everywere trying to find an answer.
Thanks again
Joe

Crowqueen

Just be really careful with your mates' items. Good luck. (Sounds like you don't need it though.)

Joeyjoe_2

Im just a private seller on ebay. If i make too much money(which i probably wont do) will they(ebay) contact me?

theonlywayisup wrote: »

Being a business in ebay terms and in line with HMRC are not the same. Ebay will make their own mind up when you need to change registration. However, it is simple for HMRC, if you buy or make in order to sell, you are a business.

As for tax, as per CQ above. Ebay do not involve themselves in your tax issues other than to liaise with HMRC if requested by them.

techspec

As already stated - if these were your own belongings AND you made no profit or did not get paid for selling your friends stuff - you are not a business and do not pay tax.

If you ARE getting paid to sell your friends stuff AND/OR the items your sold were bought to sell - then you have to declare it and have 3 MONTHS from the start of selling to inform the tax man.

Its not Ebays job to inform HMRC that you are trading - its YOURS!

At some point in the future (no-one seems sure of the trigger) - Ebay/Paypal will ask you if you are a business or not. Just answer honestly. If they don't beleive you - they may decide to part ways with you - and prevent you from continuing to sell.