Tax for selling/self employment? 23 July 2022 at 11:22AM in Cutting tax 11 replies 271 views

LightKnow

Hi 

Sorry if my questions sound silly 

I have taken a look around and spoke to HMRC but need bit more clarity


Am I correct to assume The only time I would create self assessment form if earn more than 1k from April to April ?


I made my first £5 pound writing someone CV - do I make HMRC aware of this ?

If your making money selling online say through eBay or Amazon etc 

Would be classed as self employed or sole trader or they same thing ?

keep business records and records of expenses ( would I need do this if all I was doing is selling products online)

send a Self Assessment tax return every year ( only once I earn my total 1000?)

pay Income Tax on your profits and Class 2 and Class 4 National Insurance - use ????

sheramber

What products are you selling- your no longer wanted stuff ?

or products you have made?

or products you have bought cheaply and are selling on for a profit?

pramsay13

You only need to do anything if your income exceeds £1000 and then you register as self-employed.
You are officially self-employed although sole trader is the same thing. 

LightKnow

sheramber said:

What products are you selling- your no longer wanted stuff ?

or products you have made?

or products you have bought cheaply and are selling on for a profit?

Am gonna try sell products made 

LightKnow

pramsay13 said:

You only need to do anything if your income exceeds £1000 and then you register as self-employed.
You are officially self-employed although sole trader is the same thing. 

Ok that's good to hear, thnx 

Albermarle

My understanding ( although I have seen conflicting opinions) is that the £1000 limit is on turnover and not income, which can be different.
So even if your profit is only £100 after costs, you still have to register if your turnover/ invoice amount is over £1000 pa AFAIUI

uknick

Albermarle said:

My understanding ( although I have seen conflicting opinions) is that the £1000 limit is on turnover and not income, which can be different.
So even if your profit is only £100 after costs, you still have to register if your turnover/ invoice amount is over £1000 pa AFAIUI

I'm not sure how there can be conflicting opinions on this.  If you're going to make a profit from a trade then HMRC want to know.  So, if your income/turnover exceeds your costs, or trading allowance if you so elect, you tell HMRC through self assessment.

Turnover and income are pretty much the same thing with regard to a self employed person.  However, strictly speaking turnover for a company is invoiced sales for good and services the company provides whereas income is turnover plus other types of income such as bank interest.

Jeremy535897

The logic is as follows. The trading allowance is £1,000, which replaces expenses if you elect for it. Therefore if your turnover is £1,000 or less, you could always elect for the trading allowance, and have no assessable income (you might choose to do otherwise if you make a loss based on actual expenses).

Bank interest is only part of self employed income in exceptionally rare cases:
https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim40805

LightKnow

Am assuming the income or turnover would be once you claim back the money spent on the self employed role ?


If am earning say 200 a month and my expenses are 50 pounds. Am I correct to assume I would claim anything back that was used towards this self employment ( energy bills , accessories, travel etc ? So would I get tax on 150 rather than 200 ?


This parts going to probably sound silly- 

When or should you register self employed/ or send self assessment if you have not started earning ? ( I was speaking to HMRC, they told me regardless if you make profit or not you have to register) which I kinda find naff and task and half if you don't even know the business or selling on eBay is gonna make any money  same if you started a blog since it just you posting stuff even if your goal is to make money ( the time it would take to generate revenue)- also would I need another National insurance cuz am self employed?

Sorry if I sound really stupid. Am just trying to figure out fine line between selling as hobby or classed as business/self employed.  As you could sell in car boots, on vintage etc and you automatically be classed as a trader ? 

pramsay13

Don't overthink it. If you have just started trading you don't do anything until your income reaches £1000. At that point you register as self-employed and then you can either claim individual expenses against your income, or claim £1000 trading allowance.
There's no such thing as selling for a hobby. If you are just selling your old toys and clothes etc. it's not employment, if you buy to sell on it is. 

sheramber

Turnover (income) is the gross amount you receive before any expenses are deducted.

Turnover less expenses is profit.

On your figures above  your turnover is £200
                                   your expenses are £50
                                          your profit in £150

get a notebook and have two columns or pages and note down each expense with the date etc in one column and all your income in another column/page.

Keep all invoices/receipts.

At the end of the year add up your turnover and deduct your expenses to get your profit.

if your expenses are less than £1000 you have the option to deduct £1000  trading allowance instead of the expenses.

You are taxed on your profit.