eBay Private Seller - Self Assessment Tax Return??

RFW

Ants1337 said:

I occasionally sell some things I've owned for a while, bike parts, whole bikes etc.   This could go above £1k fairly quickly, but as I've pictures of me riding the bikes this isn't trading.  All the bits are from the churn of keeping up to date with things and are used by myself before sale. 

Although, I have bought a whole bike wanting just the groupset/gears and wheels from it, and then sold on the other parts (frame, forks, saddle etc) so they're not cluttering up the shed.   I didn't buy the bike with a view to making a profit out of breaking it, but the sale of the bits did reduce the final cost of the parts I wanted to keep.    Is this trading?

I do sometimes buy 3 things quite cheaply as I want one of them and then sell the other 2 to cover the costs.  This is trading.

Would it be prudent to set up a second account with Ebay to sell these on.   And also to monitor the sales on that and when approaching £1k/30 items stop until the new year.   Then if there ever is a question on what I'm doing I can show the 2 accounts and have an easier time than trying to prove each sale was or was not a trade.   Everything 'here' was personal, everything 'there' was trading.

Final question.   In the last example of the second account, would my wife be able to set up a second account as well and then continue for another £1k/30 items?

You're misunderstanding what's happening. First there isn't a £1000/30 items issue. HMRC are going to receive reports for anyone taking over the equivalent of 2000 Euros, about £1700 and/or 30 items. If you sell personal items that were never intended to be resold then no one is bothered how much you take or how many items you sell.

Something that has been in place for a number of years is that if you take over £1000 for trading items then you need to declare that to HMRC. You should be declaring that as a business. There's no 30 item issue there, it's clearly £1000.

There's nothing to stop you and your wife having separate business accounts that earned £1000 and not have to pay tax on that. You would have to show they were two different businesses though. It all seems like a lot of hassle for the relatively small amount of tax, if any, that you'd end up paying anyway.

On the other point it is sensible to have separate business and personal accounts.

On the first bit about the bike, whether you set out to make a profit is irrelevant. It's whether you always intended to sell some of the bike when you purchased it that would make you a trader. Of course noone would know if you bought it all for spares and then later realised you could sell some of it unless you said so.

vacheron

RFW said:

.....

On the first bit about the bike, whether you set out to make a profit is irrelevant. It's whether you always intended to sell some of the bike when you purchased it that would make you a trader. Of course noone would know if you bought it all for spares and then later realised you could sell some of it unless you said so.

Is this really how HMRC would define a trader?

Being an avid eBayer, everything of any significant value I buy for my own use I will "intend to sell" when I no longer need it... Kids toys, pushchairs, old furniture, bicycles, cars, electrical appliances.

I may not be intending to sell it the second I purchase it, but I certainly would intend to sell it when it is no longer needed as I have no desire to thow things with inherent value into landfill !

By your definition, If someone has a baby and buys a Silvercross pram for £2000 with the intention of selling it when he baby grows up, should they then sell it for over £1000, they will be considered a "trader" and expected to fill in a tax return? 

Bertie129

vacheron said:

RFW said:

.....

On the first bit about the bike, whether you set out to make a profit is irrelevant. It's whether you always intended to sell some of the bike when you purchased it that would make you a trader. Of course noone would know if you bought it all for spares and then later realised you could sell some of it unless you said so.

Is this really how HMRC would define a trader?

Being an avid eBayer, everything of any significant value I buy for my own use I will "intend to sell" when I no longer need it... Kids toys, pushchairs, old furniture, bicycles, cars, electrical appliances.

I may not be intending to sell it the second I purchase it, but I certainly would intend to sell it when it is no longer needed as I have no desire to thow things with inherent value into landfill !

By your definition, If someone has a baby and buys a Silvercross pram for £2000 with the intention of selling it when he baby grows up, should they then sell it for over £1000, they will be considered a "trader" and expected to fill in a tax return? 

I've wondered about this myself, as I do the same with almost anything I buy to use, I keep the boxes in the loft and then sell things on second hand when I'm done with them. It's just being a savvy shopper. Baby equipment is a good example, I buy it intending to sell it when the baby grows up. Bikes, computer equipment, phones too.

Since I bought it intending to sell it I could, in theory, declare the difference between the price I paid and the price I sold it for as a trading loss in order to reduce my tax bill. I'm sure that's against the spirit of the law but I'd be interested to hear whether it's actually not allowed. Perhaps if you've personally used it, it's not trading, even if you always intended to sell it? What legislation prevents you doing this?

Spoonie_Turtle

The main question should probably be:

Did you buy it intending to use it yourself?

Whether you later resell after using it is not a very good test, because intention to resell usually depends on our financial situation and the economic climate when we're finished using it.  Those can completely change between the time of buying and the time of no longer needing it (or realistically for a lot of personal secondhand sellers, the time of needing some extra cash more than we need the item).

Bertie129

I've bought expensive baby equipment for our child 100% intending to sell it as soon as it's no longer needed. I keep the original boxes in the loft so I can do this. Am I trading?

GabbaGabbaHey

How many angels can dance on the head of a pin?

Presumably the question is whether it was purchased primarily with the intention of resale, or whether it was purchased primarily with the intention of personal use (albeit planning to sell it afterwards.

The whole notion of "intention" does strike me as a bizarre way to determine tax liability, as it can rarely be proven.

Example: I go into a shop which has a sale on, say, leather jackets. I buy 2, intending to keep one and wear it,  and intending to sell the other at a profit. When I get home, I decide that I don't really like the jackets that much, so I sell them both, and make a profit on each. But the profit on jacket 1 is not taxable (as I bought it intending to wear it myself), whereas the profit on jacket 2 is taxable. It's a nonsense.

Spoonie_Turtle

Bertie129 said:

I've bought expensive baby equipment for our child 100% intending to sell it as soon as it's no longer needed. I keep the original boxes in the loft so I can do this. Am I trading?

If you are (just hypothetically IF, I don't think you are) then it'd be trading at a loss and not a very good business!




Oh hello, HMRC have an online checker for whether you need to declare additional income.  One page says this:

Did you only sell personal possessions?

Personal possessions are physical items that belong to you, such as clothes, furniture or jewellery.

Items that you bought with the intention of selling to make a profit are not classed as personal possessions.

https://www.gov.uk/check-additional-income-tax

Edit: further context https://www.gov.uk/working-for-yourself

Selling goods or services

You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.

You’re likely to be trading if you:

• sell regularly to make a profit
• make items to sell for profit
• sell items on a regular basis, either online, at car boot sales or through classified adverts
• earn commission from selling goods for other people
• are paid for a service you provide

Bertie129

Spoonie_Turtle said:

Bertie129 said:

I've bought expensive baby equipment for our child 100% intending to sell it as soon as it's no longer needed. I keep the original boxes in the loft so I can do this. Am I trading?

If you are (just hypothetically IF, I don't think you are) then it'd be trading at a loss and not a very good business!




Oh hello, HMRC have an online checker for whether you need to declare additional income.  One page says this:

Did you only sell personal possessions?

Personal possessions are physical items that belong to you, such as clothes, furniture or jewellery.

Items that you bought with the intention of selling to make a profit are not classed as personal possessions.

https://www.gov.uk/check-additional-income-tax

Edit: further context https://www.gov.uk/working-for-yourself

Selling goods or services

You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.

You’re likely to be trading if you:

• sell regularly to make a profit
• make items to sell for profit
• sell items on a regular basis, either online, at car boot sales or through classified adverts
• earn commission from selling goods for other people
• are paid for a service you provide

Thank you! I think that's the answer we needed. The intention is not only to resell,  but to (attempt to) make a profit. So, intending to resell for a probable loss, or even not caring either way, is not trading. This whole intention thing is a very grey area.

Rare, discontinued or collectible items may sell at a profit, or a (tax deductible) loss, and nobody but me knows what my intentions were in buying them.

And by the way, I do do exactly as I said ... there are tons of boxes in the loft of equipment I bought intending to resell once they're no longer useful, or if I want a later/better version! I do not intend to make a profit though, I almost always sell at a loss, thinking of it as a discount on the original purchase price.

RFW

Bertie129 said:

Did you only sell personal possessions?

Personal possessions are physical items that belong to you, such as clothes, furniture or jewellery.

Items that you bought with the intention of selling to make a profit are not classed as personal possessions.

https://www.gov.uk/check-additional-income-tax

Thank you! I think that's the answer we needed. The intention is not only to resell,  but to (attempt to) make a profit. So, intending to resell for a probable loss, or even not caring either way, is not trading. This whole intention thing is a very grey area.

The fact is that (almost?) no one would deliberately buy something to sell for a loss and if they are making a loss HMRC won't care because they won't be liable to any tax anyway. I often say on here that some people who are scared or try to avoid registering for tax may be surprised to find that they could end up getting money back by declaring. The intention part is grey-ish but it's probably easy enough to work out who's trading and who isn't.

In the case of the bike part seller they'd have to somehow value the part they wanted and then knock that off the rest to work out the profit.

With a lot of this there's a lot of unnecessary worry as HMRC aren't bothered about someone missing a tenner here and there on tax, they tend to what the bigger fish. I'd much rather they went after the biggest fish who often get away with much more than all the little guys combined.

RFW

vacheron said:

RFW said:

.....

On the first bit about the bike, whether you set out to make a profit is irrelevant. It's whether you always intended to sell some of the bike when you purchased it that would make you a trader. Of course noone would know if you bought it all for spares and then later realised you could sell some of it unless you said so.

Is this really how HMRC would define a trader?

Being an avid eBayer, everything of any significant value I buy for my own use I will "intend to sell" when I no longer need it... Kids toys, pushchairs, old furniture, bicycles, cars, electrical appliances.

I may not be intending to sell it the second I purchase it, but I certainly would intend to sell it when it is no longer needed as I have no desire to thow things with inherent value into landfill !

By your definition, If someone has a baby and buys a Silvercross pram for £2000 with the intention of selling it when he baby grows up, should they then sell it for over £1000, they will be considered a "trader" and expected to fill in a tax return? 

I think it's been covered but I wasn't saying that. With more and more recycling of products I think most people now buy with the intention to sell or pass on after some use, that doesn't make you a trader.
Although in the example above you've just made a loss of £1000, so you could conceivably offset that against other profits as a trader. Now that's certainly a grey area. I'd be getting advice from an accountant on that one. I suspect it wouldn't be allowed and you wouldn't be a trader on that.