Ebay and Tax

sk2402005

I have been selling a bit on Ebay, and am making a bit of a profit, which is great, but im a little confused as to when i would start to pay tax.

I have read that everyone has a £1K tax free limit, but what im not so sure on is whether that is on the overall income, or just the profit (income minus expenses)

Thanks in advance.

soolin

sk2402005 said:

I have been selling a bit on Ebay, and am making a bit of a profit, which is great, but im a little confused as to when i would start to pay tax.

I have read that everyone has a £1K tax free limit, but what im not so sure on is whether that is on the overall income, or just the profit (income minus expenses)

Thanks in advance.

If you are only selling your own things then you will not have a tax liability.

However if you are making things to sell or buying things to sell then the trading allowance does apply and it is total income which on eBay will include all the postage etc, before fees. The details are here

https://forums.moneysavingexpert.com/discussion/6070793/1000-trading-allowance-is-made-clear-on-tax-return

sk2402005

Ok in this example what would be classed as expenses?
Sale price £10
EBay fee -£1
Shipping -£3
PayPal -60p
Packaging -40p
Original item cost -£4
Profit £1

If I stayed within the £1k trading allowance in this example I would make £1 Profit, but once over @20% tax the profit would be £-1

soolin

sk2402005 said:

Ok in this example what would be classed as expenses?
Sale price £10
EBay fee -£1
Shipping -£3
PayPal -60p
Packaging -40p
Original item cost -£4
Profit £1

If I stayed within the £1k trading allowance in this example I would make £1 Profit, but once over @20% tax the profit would be £0

Your accounts are different to the trading allowance so don’t muddle the two. For the trading allowance it is total income, so about £19.50 a week coming in which includes the full sale price on eBay including postage. Exceed that and you need to declare to HMRC and submit accounts. However your accounts will show a taxable amount on which you pay tax and NI and that might be very low . So in your example above your accounts would show a bottom line profit of £1 which is your taxable figure. However if you have any personal allowances left after any PAYE or other income then they can be used against that profit to reduce your taxable amount.

For smaller businesses just keep details of all your expenses and total it all up at end of year and submit a 3 line set of accounts to HMRC on your tax return. So basically it is total income less all expenses equals net taxable profit. Your expenses can also include losses due to returns (and as a business you must accept change of mind returns) listing fees , ink for your printer , parking at Post office etc. 

_mybelle

It's £1000 income. Not profit.  Hope this helps.