Ebay listing - vat query

sec79

Hi, I buy beauty and skincare items to sell on Ebay and am registered as a business seller. I've only just recently starting selling items again and a new option comes up when you enter the price for you to say whether VAT is included or not. I'm not sure whether to select that VAT is included at 20% for each new listing I add as a default. Sometimes on the listing if it defaults to no vat payable then if the item is for example £10 it will say that the vat is included in the £10. I do it as a side line to make some extra money so don't make a large profit. If anyone could help me with this query I'd really appreciate it, thank you. 

subjecttocontract

What's the definition of a business seller on EBay ?
Do you consider yourself a business seller because you declare income to HMRC ?
If you are below the VAT threshold then you don't collect VAT, don't charge VAT & don't declare VAT.

sec79

Hi, yes I class myself as a business seller on ebay as i have to declare income to HMRC and my income is over £1,000. My profit is only about £2,000 a year. 
When I declare my income to HMRC I presume I include the VAT they charge on their invoices? Thank you

the_lunatic_is_in_my_head

Hello OP

The threshold for VAT registration is £85,000 turnover. If your turnover (all money in) is expected to hit this in any 12 month rolling period then you should register for VAT when you expect to go over the threshold.

Based on £2000 profit I'm assuming you are under £85,000 turnover, if this is correct then you do not charge VAT and can put zero in the box. The box is there for eBay to calculate the cost for overseas buyers.

If an item is £12 with 20% VAT eBay will knock the 20% off and then apply the VAT rate for the buyer's location. If the item is £12 with 0% VAT then eBay will not knock anything off (and presumably add the VAT for the buyer's location). 

There are other circumstances for registering for VAT but I assume you live in the UK and hold your stock here so they won't apply.

With regards to expenses, if you are not VAT registered then you would record the full fee eBay charge as an expense (including the VAT element).

If you are VAT registered then you reclaim the VAT and record the net fee. 

In short if you don't need to register for VAT then the figure zero goes in the box on the listing and full eBay fees as an expense for accounts  

soolin

subjecttocontract said:

What's the definition of a business seller on EBay ?
Do you consider yourself a business seller because you declare income to HMRC ?
If you are below the VAT threshold then you don't collect VAT, don't charge VAT & don't declare VAT.

A business seller is anyone that either makes things to sell or buys things with an intention of seller, eBay work to the same rules as HMRC and legal definitions. I sell as a business but am not VAT registered. 

Whether or not income needs to be declared to HMRC is immaterial, HMRC allow a £1000 pa turnover (not income) before a person needs to register , but someone below that who buys or makes to sell is still a business and would need business policies.  It is also quite easy for a person to make a fair bit as a business on ebay , supply accounts to HMRC each year and not pay any tax as they do not use their personal allowances elsewhere. In fact the NIC limit kicks in below the tax limit for businesses. 

sec79

Thank you much appreciated. I do use my personal tax allowance as I have a main full time job, the ebay selling is just something extra I do.

RFW

sec79 said:

Hi, I buy beauty and skincare items to sell on Ebay and am registered as a business seller. I've only just recently starting selling items again and a new option comes up when you enter the price for you to say whether VAT is included or not. I'm not sure whether to select that VAT is included at 20% for each new listing I add as a default. Sometimes on the listing if it defaults to no vat payable then if the item is for example £10 it will say that the vat is included in the £10. I do it as a side line to make some extra money so don't make a large profit. If anyone could help me with this query I'd really appreciate it, thank you. 

If you're not registered for VAT you cannot charge VAT, whether included or not.
If a VAT registered seller sells something for £12 then the price is £10 plus £2 VAT.

If a non VAT registered seller sells something for £12 the price is £12 and there would be no VAT charge.

You occasionally get customers who 'like' being charged VAT as they will have a way of claiming it back.