When to tell the IR?

Twointhebush

At which point would I need to tell the IR that I'm selling on Ebay? I'll be mostly selling bits and pieces after my mother passed away, collectible books, and other odds and sods. I expect to turn over a few thousand pounds over the next year.

Thanks,

Spoonie_Turtle

Technically if you earn more than £1000 in the tax year as a sole trader.
https://www.gov.uk/working-for-yourself
https://www.gov.uk/set-up-sole-trader
I say 'technically' because there is this caveat:

You’re probably not trading if you sell some unwanted items occasionally or you don’t plan to make a profit.

In your case, it sounds like you probably intend to make a profit - but you'll have to see which of the descriptions best matches exactly what you're planning to be doing by selling online.

TripleH

Sorry for your loss.

Are these items you are selling yours (you have inherited them from your mother), has any inheritance tax due on your mum's estate been paid?

Are you selling lots of little items or do you have a few high value items you are selling?

Remember, whilst you can make a tidy profit on some itens on ebay, you can also struggle to sell some items yiu think are worth a lot.

kangoora

If you have inherited these items they are your personal property. You are not obliged to pay tax on any income generated from the sale of personal property.

There is a '9 badges of trade' HMRC have to consider whether they consider you to be a business seller. I'd suggest you come under point 9. Point 6 is really a bit stupid however.......

The nine ‘badges of trade’

1. Is your primary motive to earn a profit? If HMRC thinks you intended to make money, rather than selling items for fun, your selling activity is considered to be a business.
2. The number of transactions matter. If you repeat very similar transactions in a short period of time, this might be considered a badge of trade.
3. What type and quantity of goods are you selling? Are you buying so many that you profit from an economy of scale? Did they yield an income while they were in your possession? To demonstrate that your selling activity is a hobby, you may need to prove the goods gave you “pride of possession”, for example, a picture for personal enjoyment.
4. If your online transactions are similar to an existing type of business, such as a clothing retailer or specialist collectables seller, this may be used by HMRC as evidence that you are trading.
5. If you modify items before selling them, again this is a badge of trade. Ask yourself: do you repair, alter or improve items to make them more saleable and, therefore, achieve a greater profit?
6. How did you carry out the sale? If you sold an item in the same way as a shop or auction house – where customers agree to buy something at a fixed price – you could be classed as a business. This is known as an “undisputed trade”.
7. If you borrowed money to buy an item, especially if this loan could be repaid only by selling the items again, this is evidence of trade.
8. The period of time between when you bought the item and sold it again will be looked at by HMRC. Any assets that are the subject of trade will normally, but not always, be sold quickly. This suggests that you only bought an item with the intention of selling it. By contrast, an asset that you bought with the intention of owning it, but then decided to sell after a period of time is much less likely to be suspect.
9. How did you acquire the item? If you received something as a gift, or an inheritance, you’re far less likely to be seen to be running a business when you go on to sell.

RFW

Twointhebush wrote: »

At which point would I need to tell the IR that I'm selling on Ebay? I'll be mostly selling bits and pieces after my mother passed away, collectible books, and other odds and sods. I expect to turn over a few thousand pounds over the next year.

Thanks,

From what you've said it's difficult to tell. As above if the property is all yours and you are selling it there is no tax to pay. With the line "mostly selling bits and pieces" that implies there may be stuff originating from elsewhere.

The best advice is to ask HMRC with a clear outline of what you are selling and where it's from.

TripleH

High value items like say stamps or antiques might create a capital gains liability, however if you are selling such items you have held for say a few months the gain could be argued as negligible.

kangoora

The personal CGT allowance this year is £12k (amount of profit you can make before paying capital gains tax).

The OP is expecting to make a 'few' thousand, hardly likely to be breaching CGT limits.

TripleH

True, but we don't know their definition if a few, also gives food for thought to others reading who might be in a similar position.