eBay Private Seller - Self Assessment Tax Return??

rumouri

I have been using my eBay account to sell my personal possessions collected throughout the years. What is classifed as Income? A painting cost me £500 a few years ago, I have sold this for £550, minus the fee and postage, would the income be £20?

So confused to say the least.

Thanks for your time.

PS I have also posted under Small Business Page..

soolin

There should be no confusion at all. There is no liability to income tax on selling your own personal possessions, if you have read anything that suggests otherwise then they are wrong, and I am shocked at the amount of other forums and sites suggesting the new rules from January are going to charge everyone! 

Only businesses are required to register for tax and prepare accounts, that includes sole traders, people who buy to resell and those who make handmade items to sell. 

There can be an issue around fake private sellers, I see it all the time, buying in bulk and selling on through sites like eBay, or Vinted or even facebook marketplace but most of them know they are playing fast and loose with the rules and I suspect a small minority may be caught by the new reporting rules. 

Money_Grabber13579

I think the biggest change is that from 1 January, anyone with over £1000 of sales on online platforms may attract more attention from HMRC. That doesn’t automatically mean that you are trading and therefore liable to income tax on any profit but what it may do is prompt HMRC to ask some questions and the answers to those questions will determine liability to income tax.

rumouri

Many thanks and that makes sense.
The News headline just make me think twice about using eBay to sell off my personal possessions for downsizing.

horsewithnoname

rumouri said:

Many thanks and that makes sense.
The News headline just make me think twice about using eBay to sell off my personal possessions for downsizing.

You are fine selling your own possessions. You are not carrying out a trade, which is where you buy stuff with the intention of selling it for a profit. 

If in the circumstances you describe you did get a letter from HMRC then you would be able to show that you had sold excess items before moving home. But it is quite unlikely to happen. 

Pkman

I think (imo) if u sell brand new stuff or if you get multiple of the same item, it should class needing to pay tax (if u over the allowance limit) 

soolin

Pkman said:

I think (imo) if u sell brand new stuff or if you get multiple of the same item, it should class needing to pay tax (if u over the allowance limit) 

It all depends as the rules are quite clear, although it does seem unlikely that a private seller would have a lot of identical new items for sale. I would think anyone constantly selling the same new item, or multiples of items especially things that have options with different sizes  colours for instance, is likely to be picked up for basic questioning by HMRC, probably not this year but potentially in the future. Look at some of the ebay mega sellers, I've seen plenty with 2000+ listings of second hand clothes, all sizes, all colours every style imaginable and obviously not just found in the back of their wardrobe. 

If things were the same as they used to be  then what would happen then , and this applies to anyone questioned by HMRC, is that the seller gets a fairly innocuous letter asking whether they wanted to reconsider their submitted tax return or would like to submit a tax return, whichever applies. If that doesn't get a response then further letters are sent, a bit stronger asking specifically about non declared trading income, and depending on the amount or lack of engagement from the seller, they might even raise a speculative tax bill - expecting seller then to want to hurry up and provide the correct figures. There is also an opportunity to provide evidence that there is no trading , just selling off things. In the past we used to advise people with large collections of things to keep regular photographs, cabinets full of glass, or show racks stuffed full of shoes- anything that showed these were privately owned. Even historic photos showing pieces of jewellery or fancy watches being worn were useful (not so much now due to digital imagery being so easy)

I did voluntary work for a while and most people caught then were turned in by friends or family and usually DWP got them before HMRC ever did. Usually the idea of someone claiming benefits whilst doing huge charity shop hauls and re selling at car boots finally got to some people who were fed up of their friends boasting about it whilst claiming benefits. It was virtually all second hand items that these sellers were caught for, rarely new goods as so many people believe that you cannot be a commercial seller if you only sell second hand items. 

rollingmoon

soolin said:

There is no liability to income tax on selling your own personal possessions

The article in today's Guardian seems to suggest that it's OK if you're selling these possessions at a loss:

"HMRC says people selling off clothes or items that they originally bought at a higher price will not be liable for tax on that income."

https://www.theguardian.com/money/2024/jan/01/selling-goods-online-be-warned-hmrc-will-soon-know-about-it

Which is fine for most of the tat I sell, but I have been weeding my record collection and amongst those are some rare albums that sell for £50-100... guess I'm going to have to read the small print when it becomes available.

soolin

rollingmoon said:

soolin said:

There is no liability to income tax on selling your own personal possessions

The article in today's Guardian seems to suggest that it's OK if you're selling these possessions at a loss:

"HMRC says people selling off clothes or items that they originally bought at a higher price will not be liable for tax on that income."

https://www.theguardian.com/money/2024/jan/01/selling-goods-online-be-warned-hmrc-will-soon-know-about-it

Which is fine for most of the tat I sell, but I have been weeding my record collection and amongst those are some rare albums that sell for £50-100... guess I'm going to have to read the small print when it becomes available.

Why? 

Private sellers are not subject to Income tax on their private goods, nothing has changed and these threads are popping up everywhere without anyway who has got themselves confused, checking the actual HMRC rules about trading. 

I feel the article quoted is poorly written and will only fuel the confusion for anyone who doesn't understand the tax rules , the bit highlighted about selling at a lower price 
"HMRC says people selling off clothes or items that they originally bought at a higher price will not be liable for tax on that income."

is positively misleading, and it doesn't matter what you paid for private goods and what you sell them for for the purposes of income tax.

The most important bit of that frankly confusing article is this bit and I will start a new thread as that is going to worry a lot of people.

"Sellers on eBay will need to supply their national insurance number, and the site says it will launch information pages with the details it will be collecting."

rollingmoon

soolin said:

Why?

Because I'm not someone who makes a living out of eBay, I'm merely using it to get rid of some accumulated clutter and I'm not familiar with the ins and outs of income tax law as applied to eBay sales. I read a newspaper article that suggests I might have to pay tax on some of the proceeds and, not being willing to take said article (or well-meaning advice on forums) at face value, I thought it best to check.

Spoonie_Turtle

This is all sounding very familiar, confusing and inaccurate reporting by the media.  Happens for everything, but especially things to do wth benefits, taxes, any government policy really.  It's designed to drive 'engagement' to earn the media money, not actually designed to properly inform people.  It's shameful.

Anything that does not include a source to the original, official information is best read with an eye of suspicion.