eBay Private Seller - Self Assessment Tax Return??

RFW

NonStopStress said:

Sell 2 to 3 personal items a month, get your info sent to HMRC for you then to prove your selling your unwanted items. I'm not wrong as this is what has been said. 

HMRC have said nothing has changed.

They rarely send out letters now, only to those they suspect are undeclared high earners. They won't want you to prove you aren't a trader. They can't afford to chase someone taking £1700/year on Ebay, even if they were a trader, at that level they'd be unlikely to have any tax to pay.

Grumpy_chap

RFW said:

Grumpy_chap said:

Nothing has actually changed in terms of the tax rules and what defines trading (or not).

The £1k is reference to the trading allowance (for turnover) below which there is no need to register or declare trading activity to HMRC.  It only refers to trading and not selling own items.

The 30 items is, AIUI, an eBay trigger and not an official HMRC threshold.  I strongly suspect that eBay have chosen this as a "high" threshold that means only a very small percentage of all active accounts are reported.  If I was eBay, I would set this trigger at a level that means only 1% (or something similarly low) of all active (within the past 12 months?) selling accounts triggered the "potential trader" flag.

Again, if someone is only selling their own stuff and the occasional unwanted gift, then there is nothing that gives rise to a tax liability.

From what I've read the 30 item/2000Euro trigger is part of the international law we've signed up to. The OECD seems to have set it globally, although I can't be certain.
From what I've seen HMRC say they're going to get the info from Ebay, etc and then sit on it until something happens. It's difficult to filter the details from the media hysteria.
Having a little insight as to how HMRC works (fairly badly!) I find the idea that they're going to start sending letters to everyone who's sold 30 items on Ebay for them to prove they aren't trading as quite hilarious.

Thank you
You may be correct about the 30-item trigger.
I thought it was an eBay internal trigger, but I do not know and have nothing concrete on where that came from and nor am I going to research it.
I don't think the 30-item trigger is unreasonable.

RFW

LeighBarber said:

Very confused about this... If, as a full time university student with no employment at all, I sell 2nd hand things I have found (by found I mean literally found and not purchased... Specifically car parts from the side of roads) would I be liable to pay tax on anything I make over £1000? What about the personal £12000 tax allowance?
With no actual job, and money only being made from the above, would i be liable over £1000 or the tax allowance? Do I need to do anything at all?

This seems to have been swallowed up with other comments. You are technically a trader. You would be best getting some advice where you can give your details. Try within the university, CAB, or HMRC themselves.
You may find that if you register as a business you could end up getting supported in that, so instead of costing you money you might end up with more. A local library might have a business start up group you could access. Within recycling, there may also be grants available.

DullGreyGuy

LeighBarber said:

Very confused about this... If, as a full time university student with no employment at all, I sell 2nd hand things I have found (by found I mean literally found and not purchased... Specifically car parts from the side of roads) would I be liable to pay tax on anything I make over £1000? What about the personal £12000 tax allowance?
With no actual job, and money only being made from the above, would i be liable over £1000 or the tax allowance? Do I need to do anything at all?

If you randomly one day found something, and after following due process to attempt to reunite it with its owner, sold it then that wouldn't be a trade. 

In your case though it sounds like you are actively going out looking for items with the intention of then selling them in which case that would be a business. If you go over £1,000 revenue then you'd need to register as self employed and do a tax return but there would be no tax to pay until your profit goes over your tax free allowance. 

jaywood said:

I have a few questions regarding this as the recent news has got me twitchy:

As a hobby I collect art prints and regularly sell them on eBay to free up space when my portfolios are at bursting point. Now assuming I sell these prints at just a smidge over the original price I paid to cover my own shipping cost and seller fees (I offer free shipping), am I considered a trader?

Secondly, regardless of whether I am a trader or not, do my total sale earnings make a difference or is it based solely on profit?

Ultimately its between you and HMRC or a Judge to decide but from what you say you are simply selling your personal possessions and so not a business.

Your second question is too light @jaywood... all that has changed is that eBay will now tell HMRC who's selling over £1k of stuff a year. Clearly that has to be revenue as eBay has no idea what sellers paid for the stuff, what other advertising they may be doing etc to be able to work out profit.

HMRC rules remain the same... for sole traders with under £1,000 revenue no need to do a tax return, for those with over £1,000 revenue a tax return is required but tax is paid on profits not revenue. 

Neither revenue nor profit define if you are a trader or not... the chap who sold his 1959 Ferrari on eBay for $3.3m doesn't suddenly become a trader just because his revenue was over £1k, he just sold his car. Even making a profit or not doesn't make you a trader... some traders are bad and make losses, some people are lucky and make profits on their personal possessions. It's the intent... are you buying things (or otherwise obtaining them) with the intention of selling them for profit then you are a trader if you succeed or not. 

RFW

DullGreyGuy said:

s.

Your second question is too light @jaywood... all that has changed is that eBay will now tell HMRC who's selling over £1k of stuff a year. Clearly that has to be revenue as eBay has no idea what sellers paid for the stuff, what other advertising they may be doing etc to be able to work out profit.

HMRC rules remain the same... for sole traders with under £1,000 revenue no need to do a tax return, for those with over £1,000 revenue a tax return is required but tax is paid on profits not revenue. 

Neither revenue nor profit define if you are a trader or not... the chap who sold his 1959 Ferrari on eBay for $3.3m doesn't suddenly become a trader just because his revenue was over £1k, he just sold his car. Even making a profit or not doesn't make you a trader... some traders are bad and make losses, some people are lucky and make profits on their personal possessions. It's the intent... are you buying things (or otherwise obtaining them) with the intention of selling them for profit then you are a trader if you succeed or not. 

Can I clarify that the rules UKG have signed up to that will have companies sending info to HMRC is from 2000 Euros or 30 sold items. It's nothing to do with revenue for business tax purposes. As I understand it has more to do with international tax compliance.

On the last point there someone selling a personal possession and raking in a large profit has nothing to worry about declaring trade income, they need to check how capital gains tax laws may apply. Although if they've just banked $3million they can probably afford an accountant for half an hour!

mjb7219

As a very frequent user on Vinted both to buy and sell second hand clothes, I easily have traded over the £1000 as the items I usually buy are pretty high value! The north face, being the biggest.

Now one example of an item I purchased (second hand already) was a North face jacket listed from a seller worth over £150 listed and being sold by this guy as “purchased on Vinted recently himself but only selling on now as it didn’t fit” 

..Precisely how I search and buy many many numerous items on a day to day basis knowing I have the security that if it didn’t fit I could always re-sell on the jacket myself later!

I’d like to know (hypothetically maybe) if everyone who purchases and re-sells this one particular item just happens to have sales over £1000 a year, could potentially we will all be taxed on it? 

Thanks!

caprikid1

Only tax payable on profit though. Not everyone can make a profit on the item after postage and costs.

jon81uk

mjb7219 said:

As a very frequent user on Vinted both to buy and sell second hand clothes, I easily have traded over the £1000 as the items I usually buy are pretty high value! The north face, being the biggest.

Now one example of an item I purchased (second hand already) was a North face jacket listed from a seller worth over £150 listed and being sold by this guy as “purchased on Vinted recently himself but only selling on now as it didn’t fit” 

..Precisely how I search and buy many many numerous items on a day to day basis knowing I have the security that if it didn’t fit I could always re-sell on the jacket myself later!

I’d like to know (hypothetically maybe) if everyone who purchases and re-sells this one particular item just happens to have sales over £1000 a year, could potentially we will all be taxed on it? 

Thanks!

There is no new tax, your title is incorrect.

If you are buying items for your own use and then selling what you don't need any longer or doesn't fit, then you are not trading and no tax is due.

Start buying items with the intent to sell for profit and you are a trader. Make more than £1000 profit and you need to declare the income for tax purposes.

So in your example if you bought the item with the genuine intent that if it fits you will wear it, nothing to worry about. But if you are buying many items at low price to try and resell and make money, you need to consider if your income is high enough to be taxed.

se2020

If you buy one North Face coat for £900 and it doesn't fit so you sell it for £1500 that's not a problem.
If you buy 15 North Face coats in Medium at £100 esch and sell them all for £140 each because none of them fit you will have a problem.

se2020

Also,
Look at your numbers and compare them to your lifestyle. 

At £150 each, I think more than 6 jackets a year would be questionable. 
You will struggle to argue that none if them fitted especially as they are all jackets (so fewer sizes available) plus they are all the same brand so a "medium" is normally the same measurement across the range.

A few £thousand a year on clothing would not be questionable, even making a profit on most of the items could be explained by you being a savvy shopper.
But  "many many numerous items day to day" might be pushing it a bit.
Especially if you are listing most/all of them at a price higher than you originally paid.

Also,
If you do a £100k/year job where image is important and you should not be seen wearing the same cloths twice you might have a reason.
If you have a £8k/user part-time job and also happen to make £5k profit a year selling cloths they might expect a decent explanation for that.