Tax implications and Ebay

brightondave

I have a part time 3 day a week job that is paye and I get state pension (the full amount) job is about £885 per month take home and pension is about £750 so I pay standard tax on both.
I sell on ebay mainly stuff I've bought at car boots as they were before covid, but have now taken to buying from an online auction monthly and selling selected bits on eBay.
If I shell out sometimes about £1000 at the auction and sales from ebay on those items amount to maybe £1350 for example, I've read to my shock that your are allowed up to £1000 per month without having to pay tax, but is the amount they are talking about is up to £1000 profit or sales?
Because if the sales are £1350 the profit is only £350 and you get charged fees as well?   Any help is appreciated

RFW

brightondave said:

I have a part time 3 day a week job that is paye and I get state pension (the full amount) job is about £885 per month take home and pension is about £750 so I pay standard tax on both.
I sell on ebay mainly stuff I've bought at car boots as they were before covid, but have now taken to buying from an online auction monthly and selling selected bits on eBay.
If I shell out sometimes about £1000 at the auction and sales from ebay on those items amount to maybe £1350 for example, I've read to my shock that your are allowed up to £1000 per month without having to pay tax, but is the amount they are talking about is up to £1000 profit or sales?
Because if the sales are £1350 the profit is only £350 and you get charged fees as well?   Any help is appreciated

Contact HMRC and ask them.
You're running a business so you should be registered as such. From what you've written there's no way to tell what you are earning from this business if anyone here is qualified to advise you further.
If you're buying stock for £1000 in auction and selling for £1350 on Ebay you can't be earning much, if anything.

Dazed_and_C0nfused

I've read to my shock that your are allowed up to £1000 per month without having to pay tax, but is the amount they are talking about is up to £1000 profit or sales?

Tax is based on profit not sales but the £1000/month would only apply if you have no other taxable income and had not used your Personal Allowance.

That clearly isn't the case so any profit (after either actual expenses or the Trading Allowance) would be taxable.  

You will need to register with HMRC and complete an annual Self Assessment return.

If this started in the current tax year no you have until October to register however there is nothing to be gained by leaving it until then.

If it started in an earlier tax year you should register asap.  Before HMRC come after you.

soolin

As above, if the £1000 limit you refer to is actually your allowances, then you will already have sued the upon your pension and PAYE income so all your net income from eBay will be taxable. However I do wonder if you mean the £1000 trading allowance exemption, but that is £1000 for the year and is gross, so you exceeded that in a single month.  https://forums.moneysavingexpert.com/discussion/6070793/1000-trading-allowance-is-made-clear-on-tax-return

Again as above you might want to sit down and actually work out whether you are making money or not. As a business seller you are paying listing fees, EBay FVFs , PayPal fees (assuming you aren’t already on managed payments, you need to cover returns, losses and all overheads . 

martindow

brightondave said:

If I shell out sometimes about £1000 at the auction and sales from ebay on those items amount to maybe £1350 for example

This looks more like a hobby than a business as you can't be making a profit on those figures.  Once you have set off the Ebay and Paypal fees, included your mileage expenses going to auctions and the PO and other expenses for packaging, etc. you are probably incurring a small loss rather than making a taxable profit.

MR1988

Hobby or not I believe it still has to be declared through Self-Assesment. HMRC doesn't know if the £1350 you make is profit or loss, for them that figure is your income. By filling Self-Assesment you let them know of how much actual profit you made. As mentioned above, it's probably better for you to sit down and crunch the numbers and see if it's worth it.

soolin

martindow said:

brightondave said:

If I shell out sometimes about £1000 at the auction and sales from ebay on those items amount to maybe £1350 for example

This looks more like a hobby than a business as you can't be making a profit on those figures.  Once you have set off the Ebay and Paypal fees, included your mileage expenses going to auctions and the PO and other expenses for packaging, etc. you are probably incurring a small loss rather than making a taxable profit.

There is no such thing as a hobby seller. If this is a hobby and they can demonstrate to HMRC if asked that the hobby is not designed to make money and is purely something to do that passes the time (which is an odd hobby but I'm sure there are stranger ones) then it would not need to be declared. However the moment it makes a profit or indeed if there is an intention to try and make a profit then it would need to be declared even if that showed little or no actually net profit. 

A business is a business even if it makes a loss. 

the_lunatic_is_in_my_head

There is your standard personal tax allowance which is £12,500 (and you can transfer an additional £1250 from your husband, wife or civil partner if they don't use all of theirs).

Income over these amounts is taxed but I've got no idea how pensions are taxed. 

As Soolin says there is also a £1000 online selling allowance meaning you can buy for resale as a business but not have to register for tax on this if you stay under £1000 of gross sales per year. It's still sensible to keep records of your activity.

At £1350 a month you should be keeping basic records of income and expenses so know your actual profit, £1000 turned to £1350 might not sound like much after expenses but if you are happy with the time vs reward then the extra income is obviously worth it to you. 

RFW

soolin said:

martindow said:

brightondave said:

If I shell out sometimes about £1000 at the auction and sales from ebay on those items amount to maybe £1350 for example

This looks more like a hobby than a business as you can't be making a profit on those figures.  Once you have set off the Ebay and Paypal fees, included your mileage expenses going to auctions and the PO and other expenses for packaging, etc. you are probably incurring a small loss rather than making a taxable profit.

There is no such thing as a hobby seller. If this is a hobby and they can demonstrate to HMRC if asked that the hobby is not designed to make money and is purely something to do that passes the time (which is an odd hobby but I'm sure there are stranger ones) then it would not need to be declared. However the moment it makes a profit or indeed if there is an intention to try and make a profit then it would need to be declared even if that showed little or no actually net profit. 

A business is a business even if it makes a loss. 

Very true. John Lewis is said to have made a big loss this year, I don't think they can put it down to being a hobby!
In some cases you can be better off registered for tax. If it is run as a hobby and making a loss then the losses may well be set aside against other earnings. I'm terrible at all this but HMRC are really helpful and give free advice.

mimi1234

RFW said:

 I'm terrible at all this but HMRC are really helpful and give free advice.

They are indeed.  I went on a free course a good few years ago and they explained everything in detail.  Obviously won't be the same with corona but they will be able to give you an exact answer.

martindow

soolin said:

A business is a business even if it makes a loss. 

Is it though if it is never going to turn a profit?  I remember seeing something from HMRC referring to hobby businesses, albeit some twenty years ago.

As an example they talked of an artist who occasionally sold paintings but his expenditure on materials was always going to exceed the sales income.  They specifically said that as such, the 'business' was not profit-making and was never likely to be so they did not want to receive tax returns.

The OP seems to be similar unless they have aspirations to make profits in the future.  Of course HMRC may have changed their attitude over decades!