Ebay earnings

Archergirl

I fill in a self assessment tax form, up until now I haven't had to pay tax on my ebay sales so I just put sales at 5K but now I get my OAP I will have to pay tax.
I know I can claim for things like business cards, printer ink, ebay fees etc, my question is if I have outgoings of say £1000 pa how will this impact on my ebay sales of about 5k a year?
At the moment I am about 2k over my tax free allowance.

Carl31

Using your figures, assuming your pensions use up all of your PA, you will be taxed at 20% on £4000 so £800 of income tax will be due

Thats a very basic view of things though, and make sure you are clued up on business expenses and any reliefs you might be able to claim

Archergirl

Thank you, not clued up at all so will have to look into it.

Valli

You say your sakes are £5k but is this all profit? It's the profit that is taxable, which is probably a lower amount than the sales. Do you buy items to sell? You need to keep a record of all outgoings related to your eBay business.

Archergirl

We make the things. The 5k is sales so I know I need to keep receipts for the things we use/buy etc. It's all a bit daunting but I expect it will be OK when I fill in the SA form.

cheesetoast

Let's say you buy £1000 of stuff to resell. You spend another £1000 on business expenses. You get £5000 in.

You made £3000 profit, and you'll pay 20% of that as tax.

roger_c

As far as I can make out with the new 'small trader allowance' from April 2017 you can either tax your 'profit' as stated by cheesetoast, OR tax the income after deducting the £1,000 new allowance. It will depend whether your expenses are higher than £1,000 as to which route you go down.

If you're making sales just now, then you'll simply be taxing the profit (as above) as the new allowance doesn't come in until 6 April 2017.