Ebay and taxes (HMRC)

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Hello there.

Looking for alittle advice.

Since covid started, I have been working from home full time. Alongside my full-time employment (I earn above the personal allowance), I have been selling some of my old games consoles/games on ebay. I have also been buying some games/console bundles (not from ebay), taking out the items that I need for my collection and then selling the rest back on ebay (not for profit).

It's here that I've run into abit of a condumdrum. In total this tax year, I have 'received' about £4,000 from ebay, including the postage and packing costs. I have probably paid out a few hundred pounds to post the items that I have sold. I am a private ebay seller, and in my naivity I did not even consider the tax implications (as the items were mine in the first place, or I purchased them in the last year with my own money).

 Have I now dug myself into a big hole with HMRC? - Do I now need to start filing self-assessment documents?.

I'd really appreciate some advise from anybody who has been in a similar position.

I guess my question comes down to 'Income' from ebay versus 'profit' from ebay. Does HMRC differenciate?

Thanks

[Deleted User]

 You're not running a business. You're just selling personal possessions. 

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I think my concern is just the value, apparently HMRC allows you £1000 as a 'trader allowance', but I might just be getting confused. As far as HMRC can see I've 'made' £4,000, though I've also paid out alot to aquire most of it.

nick74

If you're not selling the items for profit then the tax due will be zero and HMRC will not be interested. Re-selling your own personal possessions does not make you a trader, even if you sell £4k worth. 

Jeremy535897

The trading allowance is to save people who have a trivial business from having to complete a self assessment tax return for trifling amounts of tax. The key word is "business". You didn't buy your original games consoles to sell them at a profit presumably, and you say you only bought the other items sold because they were bundled in with something you bought to keep. If you have no profit motive, you aren't trading. In theory you could pay capital gains tax, but chattels sold for £6,000 or less are exempt (unless part of a more valuable set).

soolin

Whilst the above is correct it is not always that simple . Using a private account to sell does not mean that eBay won’t make a  routine declaration to HMRC at which point HMRC would raise an estimated tax bill, or at least ask you to reconsider your tax return. It would then be a matter of providing proof to HMRC that all these items are historically owned by you , and as you have bought and resold that might not be easy. £4000 from selling old games is a lot of money and I’m sure why you see there is a chance HMRC would be interested. 

I used to do a lot of voluntary advice work and one area that I used to see a lot of was sellers selling second hand clothing and toys (and it was mostly clothes and toys) that they claimed were all unwanted family items, and which HMRC considered of such a volume as to be a trade. 

For peace of mind I would make a habit of keeping full details of all your purchases so if necessary you can prove to HMRC that you spend more on buying these items than you do selling them. 

Jeremy535897

HMRC do look at some vendors on Ebay who list themselves as businesses to see whether they are declaring profits from a trade. Ebay don't send anything to HMRC as far as I am aware (although vendors do get scam emails from people purporting to be HMRC employees who claim to have received information from Ebay). There was a high profile evasion case, but the sales were in the millions. I would be amazed if HMRC looked into a private vendor making the occasional sale of some old computer games. 

Thrugelmir

HMRC take a close look at activity through platforms such as Ebay, AirBnB and Amazon. Likewise are you paid through Paypal or now Ebay directly.  Activity levels are more often or not a clear sign of business transactions as opposed to simply clearing out and selling off unwanted household possessions. 

Data collected is added to the Connect database. 

soolin

Jeremy535897 said:

HMRC do look at some vendors on Ebay who list themselves as businesses to see whether they are declaring profits from a trade. Ebay don't send anything to HMRC as far as I am aware (although vendors do get scam emails from people purporting to be HMRC employees who claim to have received information from Ebay). There was a high profile evasion case, but the sales were in the millions. I would be amazed if HMRC looked into a private vendor making the occasional sale of some old computer games. 

I do prefer to link to something official, but it’s late so will link to a discussion instead

https://www.thisismoney.co.uk/money/news/article-4107122/How-taxman-spies-buy-sell-online-thanks-new-law-hardly-noticed.html

ebay do declare to HMRC when approached , it’s not routine but you would be surprised how many people get HMRC letters asking them to ‘reconsider’ their tax returns to ensure they haven’t overlooked online retail trading. 

As I said earlier I did voluntary work, virtually every person I spoke to had been reported to either DWP by friends or relatives, or to HMRC officially for not declaring online trading. We are talking several people a week from a very small locality . 

macman

Buying stock for resale is obviously trading, and so any revenue is earned income. If you buy things and resell them within the year then that could well be construed as trading. It's not a clear-cut instance.

noitsnotme

“Badges of trade” is something you might want to familiarise yourself with. They are essentially tests that HMRC use to determine if you are trading or if it’s just part of your hobby.

There’s loads out there if you Google but this one picked at random is a fairly good simple description - https://www.elverconsultancy.co.uk/what-are-the-badges-of-trade/