Tax returns on full time job whilst selling antiques in spare time

geezer13

Hi All,

I am currently buying antiques with a view to selling them from early next year onwards. My question is I guess I need to inform HMRC immediately? Also, say I buy something today and sell in June next year, in which tax year would the profit be made?

Thanks.

Regshoe

geezer13 wrote: »

Hi All,

I am currently buying antiques with a view to selling them from early next year onwards. My question is I guess I need to inform HMRC immediately? Also, say I buy something today and sell in June next year, in which tax year would the profit be made?

Thanks.

When exactly a business starts is arguable, but if you are not currently attempting to sell and are not in a position to make a profit I wouldn't register yet. I would register at the point that you start trying to sell the goods.

For a retail style business you will recognise the income when you make a sale and also record the purchase cost as an expense at that time, until that point the items are stock and you have just swapped one asset (cash) for another (stock).

The above is just a very basic answer and you may want to consider consulting with an accountant, which for a small business needn't be that expensive.

Amatheya81

Hi,
Yes, you need to register with Hmrc and do a yearly tax return. Depending on how much you expect to earn you may need to pay an extra NI contribution.

If you buy something this financial year and sell in the next then you register the expense this year and income next.

Atidi

geezer13 wrote: »

Hi All,

I am currently buying antiques with a view to selling them from early next year onwards. My question is I guess I need to inform HMRC immediately? Also, say I buy something today and sell in June next year, in which tax year would the profit be made?

Thanks.

A profit is not a profit until you realise it (or at least invoice for it)

geezer13

Another question!

What happens if I buy £5000 of stock in 2013/2014 tax year and sell it in the 2014/2015 tax year for £6000. I take it I record a loss for this tax year and carry it forward for the 2014/2015 tax year. Also, am I right in saying I will only be liable for income tax on £1000 in year 2?

Thanks!

Laurajo_2

Strictly, you calculate cost of sales in the first year as purchases, then you deduct the closing stock value....in most cases, this will be the purchase value, leaving a balance of nil.

Amatheya is incorrect in this case although as she quite rightly says, you should be registered at the point when you start trading. You effectively claim the expense when the item is sold by reducing the stock balance.

For example in a tax year you buy 5k worth of stock. You sell an item that you paid 1k for at a price of 3k. Your sales are therefore 3k, your purchases are 5k, but you deduct the cost of the remaining stock which will be 4k, to give a cost of sales of 1k. You will therefore pay tax on the 2k profit.

Of course, if your stock decreases in value (for example, it gets damaged or you do not believe you can sell it for more than the purchase price as the market has changed) you can use the lower figure - known as the net realisable value.

Amatheya81

I stand corrected :-)

Atidi

geezer13 wrote: »

Another question!

What happens if I buy £5000 of stock in 2013/2014 tax year and sell it in the 2014/2015 tax year for £6000. I take it I record a loss for this tax year and carry it forward for the 2014/2015 tax year. Also, am I right in saying I will only be liable for income tax on £1000 in year 2?

Thanks!

I suggest you get an accountant. It sounds like you need one!