ebay business and tax

dprovan

Hi

having read a few month ago the need to register ebay activity with the tax man, I did just that. However I have done little else and wonder if I was right to register or not.

I have a full time job and earn approx 36,000. I sell on ebay for a little extra holiday money. Although I have a high turnover maybe as much as £40000, I make a small profit, I estimate maybe 3-4k max. THis is mainly because I am dealing in buying and selling expensive items and it is a hobby I enjoy and the profit allows me to buy a few extras for the kids.

So my question, I have registered with the tax man and am paying the N.I. for the small business, when it comes April time will I still submit the full years activity given these small profits. Hvaing never sumbmitted my own tax figures I have no idea how this will look. I have kept detailed spreadsheets of purchases and sales and business fees ie paypal etc and I have been pretty good at keeping receipts for expenses. Will I need to submitt all the receipts etc?

thanks

LittleVoice

You won't need to submit the receipts to the tax man - but you will need to have them available.

To a lot of people even £3000 is not a small amount: it is £57/week. How many children do you have where £57/week buys just a few extras? And even your maximum £4000 is more than 10% of what you yourself are earning in your full-time job. Net profit of 10% seems pretty good to me, particularly from a hobby.

Murdina

To complete the relevant SA pages, you need to have drawn up some accounts. These will contain sales, purchases and any associated expenses. With a turnover of 40k you have to complete the full pages which means all these have to be analysed as per the guidance notes to SA pages (if your turnover were 15k or less it would be simpler).
Accounts should strictly follow accounting principles which means you have to take into account opening and closing stock. This may make a surprising (to you) difference to your profits. If you are not confident about getting this right (and I agree with comments above - this is not small beer) I would suggest you see if a local accountant will do just the accounts for you and then you do SA return and use what he does as guidance for next year. His or her fee may be less than the cost of tax, interest, penalties and surcharges if you make a mistake.

mrsS_2

I think you need to see an accountant pretty soon anyway- If you are "only" making a profit of £4000 you would qualify for the small earning exemption for class 2 national insurance contributions, so wouldnt actually have to pay these.

I dont think you can claim these back if you overpay.

Also as you earn £36000 from employment, there is a small complication with class 4 national insurance on your self employed income- I think you need someone to sort it out so you dont overpay.

Murdina

mrsS it's a good point to flag but on those profits no class 4 NI due for now. Also it's easy enough to sort out for yourself - see http://www.hmrc.gov.uk/nic/refund-nic.htm
In theory the NIC office should tell you, but it doesn't always seem to happen.