Ebay have asked I change my account to a business account

Legacy_user

So I done it, this is because I have been selling around 30 items per week and making small profits. Now I have self employed job that pays around £50 per week and I think I will make around £100 per week from ebay as a business seller.

I can't see me going over the tax free limit of £7000 I think but I am currently registered as self employed. Do I now also need to register a business with hmrc regarding the ebay stuff or can I just add the ebay profits to my self employment tax return.

I am so confused and don't want to upset HMRC!

buglawton

You simply need to complete a tax return as a sole trader after the end of the tax year (Apr 5th).

Start keeping all invoices/receipts for business-related bills, from packaging to phone calls.

You can 'share' some basics costs like electric, line rental, with your household.

If you income minus costs is low, there will be no tax to pay. But you will probably be due to pay a modest National Insurance bill.

heathcote123

berbastrike wrote: »

So I done it, this is because I have been selling around 30 items per week and making small profits. Now I have self employed job that pays around £50 per week and I think I will make around £100 per week from ebay as a business seller.

I can't see me going over the tax free limit of £7000 I think but I am currently registered as self employed. Do I now also need to register a business with hmrc regarding the ebay stuff or can I just add the ebay profits to my self employment tax return.

I am so confused and don't want to upset HMRC!

The tax free limit is cumulative - don;t you have any other income?

soolin

I have self employed earnings from various sources and complete online assesments forms each year. I do seperate out my earning streams htough, so all online and offline selling (including ebay) go in the same set of accounts.

I do pay tax as my cumulative income exceeds my allowances- but I find National insurance is the killer as self employed people pay both class 2 and class 4 once their income is high enough:

If you're self-employed

If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount

If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.
From April 2011, your Class 2 National Insurance contributions payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.
You pay Class 4 National Insurance contributions when you pay your Income Tax.

• How to pay self-employed Class 2 National Insurance contributions Opens new window

• Find out more about Class 2 National Insurance contributions Opens new window

soolin

On your estimated figures of £150 per week from two sources you will be over the basic single allowances tax wise and also due to pay both class 2 and class 4 NIC.

£150 x 52 = £7800

heathcote123

soolin wrote: »

I
I do pay tax as my cumulative income exceeds my allowances- but I find National insurance is the killer as self employed people pay both class 2 and class 4 once their income is high enough:

I dont think the 7k tax free limit has any bearing on this then, if you're already over it. THough isnt it going up this year to 8.5k or something?

BoGoF

If you are "making £150 a week" that would imply your tunrover would be higher and sounds like you should have been declaring this before now....under the tax limit or not you still need to declare it.

newmoneysaver2012

soolin wrote: »

I have self employed earnings from various sources and complete online assesments forms each year. I do seperate out my earning streams htough, so all online and offline selling (including ebay) go in the same set of accounts.

I do pay tax as my cumulative income exceeds my allowances- but I find National insurance is the killer as self employed people pay both class 2 and class 4 once their income is high enough:

If you're self-employed

If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount

If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions.
From April 2011, your Class 2 National Insurance contributions payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.
You pay Class 4 National Insurance contributions when you pay your Income Tax.

I didn't know anything about this!
Thanks for the info.

soolin

Can I just say that it is worth phoning HMRC when you start up as a trader as they are often very helpful. I even had an account manager for a while and could phone up and ask daft questions.

As for personal allowances for the last tax year ended 5 April 2011 the basic personal allowance was £6475, for the current year ending 5 April 2012 the allowance is £74.75. If you haven't already done a 2011 tax return it needs to be done now online and submitted before the end of this month.

System

Huge thanks everyone, I don't know what I'd do without MSE!:):)

The job that makes me around £50 per week will probably make me around £10 per week in the tax return if I include mileage at 40p per mile. And I think ebay will make around £3000 per year after a more realistic view. I have already made myself exempt from Class 2 contributions I think because of low income.

So will I do a tax return for my sole trader business and my self employment? Or just do one? Even though I am registered as a business ebay seller, it is necessary to then register as a sole trader?

steve1980

When you do your end of year tax return you can include the different jobs you have on the same form.