New tax rules

GadgetGuru

A little confused with the new tax rules coming into effect in Jan 2024.

So if I earn over £1000 in a year from selling stuff, websites are required to provide direct info to HMRC, and I need to complete a self assessment at the end of the tax year.
Is this just for sites like Etsy, where people make items etc for sale, or is eBay included?

If the latter, is this for private eBay sellers or just business sellers?

Does it apply to unwanted items I’m just selling - not items I’ve purchased to sell for profit? If so, how will HMRC distinguish the difference?

How will this all work?

Spoonie_Turtle

It's for trading - selling items you've bought or made with the intention to sell on (presumably for profit). 

There are lots of telltale signs when someone registered as a private seller is actually a business, genuine private sellers shouldn't have anything to worry about.

soolin

The requirement to register as self employed haven’t changed, the only difference is that now online sites will be automatically providing HMRC with details. HMRC requirements have always been that if you buy or make things to sell then you are a business . There is an exemption for registering if your total income from selling is less than £1000 pa, that’s income not profit so less than £20 a week including postage received.

You may find this thread of interest 


https://forums.moneysavingexpert.com/discussion/6479586/new-hmrc-rules-re-sites-automatically-declaring-income#latest

As for how HMRC decide what’s trading and what isn’t they trust that people are honest enough to declare, but in reality they work on the basis of probability. Does someone look like a business or not. The thread above covers a lot of chat about it , but it is not uncommon for HMRC to test a situation by asking a seller if they want to re consider their declaration. 

RFW

A few years ago I received a letter from HMRC telling me that I needed to be registered as a business. I already was. They just had slightly different information that they'd received from somewhere, probably Ebay at the time.

Anyway I expect that what will happen is that they'll get the information, check it against their database and send a letter out that you should be registered. I'd be surprised if they started chasing people earning £1000 per year for tax. 

If I was tasked with sorting this out I'd be looking for the big earners first. I often see sellers who aren't registered for VAT and look to be trading above the threshold. I had one in my space who was clearly trading for more than a year at above the threshold, they're now registered for VAT.

GadgetGuru

Thanks for the info guys! Will have a read over the link supplied above, but I’m only a private seller thats shifting stuff from home, or items that I’ve reviewed and no longer need, so seems I should be OK……

jon81uk

IftiBashir said:

Thanks for the info guys! Will have a read over the link supplied above, but I’m only a private seller thats shifting stuff from home, or items that I’ve reviewed and no longer need, so seems I should be OK……

If you are not buying items to resell you are fine. If the items were bought with the intention that you would use them then you are a private seller.

messia07

soolin said:

The requirement to register as self employed haven’t changed, the only difference is that now online sites will be automatically providing HMRC with details. HMRC requirements have always been that if you buy or make things to sell then you are a business . There is an exemption for registering if your total income from selling is less than £1000 pa, that’s income not profit so less than £20 a week including postage received.

You may find this thread of interest 


https://forums.moneysavingexpert.com/discussion/6479586/new-hmrc-rules-re-sites-automatically-declaring-income#latest

As for how HMRC decide what’s trading and what isn’t they trust that people are honest enough to declare, but in reality they work on the basis of probability. Does someone look like a business or not. The thread above covers a lot of chat about it , but it is not uncommon for HMRC to test a situation by asking a seller if they want to re consider their declaration. 

so if i'm correct, the £1k limit doesn't apply and there is no upper limit, as long as your selling your own items and not buying to sell / operating a business?

is that correct soolin?

soolin

messia07 said:

soolin said:

The requirement to register as self employed haven’t changed, the only difference is that now online sites will be automatically providing HMRC with details. HMRC requirements have always been that if you buy or make things to sell then you are a business . There is an exemption for registering if your total income from selling is less than £1000 pa, that’s income not profit so less than £20 a week including postage received.

You may find this thread of interest 


https://forums.moneysavingexpert.com/discussion/6479586/new-hmrc-rules-re-sites-automatically-declaring-income#latest

As for how HMRC decide what’s trading and what isn’t they trust that people are honest enough to declare, but in reality they work on the basis of probability. Does someone look like a business or not. The thread above covers a lot of chat about it , but it is not uncommon for HMRC to test a situation by asking a seller if they want to re consider their declaration. 

so if i'm correct, the £1k limit doesn't apply and there is no upper limit, as long as your selling your own items and not buying to sell / operating a business?

is that correct soolin?

Yes, that has always been the case. HMRC are only interested in business sellers for the purposes of income tax. These new initiatives have made no changes at all to that. 

moonpenny

Just out of curiosity I am a bit confused with this. I thought the tax year went from April to April.
So, if info is collected from Jan is that for the previous year? How does it work?

soolin

moonpenny said:

Just out of curiosity I am a bit confused with this. I thought the tax year went from April to April.
So, if info is collected from Jan is that for the previous year? How does it work?

If reporting starts from Jan 24 as planned then whatever arrangements HMRC expect from online sites will apply. They might ask for a calendar year, they might expect quarterly reports (which was an earlier plan) or tax years- the onus will still be on the seller to provide accurate accounts for their tax return. Sellers don’t even need to have accounts that match the tax year, they can have a different accounting year if it is reported clearly.