eBay seller rules and CGT

monaymadlol

Hi

I'm wondering if the eBay etc new HMRC rules will effect me.

I sell my own possessions, some which have gone up in value. Some I sell soon after buying, some later.

Small volumes. I don't intend to buy to resell. I've kept receipts for everything. Occasionally I've sold at a loss. I'm always under the CGT allowance anyway so don't declare on self assessment. Should this only be declared if above the allowance?

I pay my usual work income taxes, online and in time.

I don't have a premises, and I'm not an actual business.

I'm worried I may be liable for taxes this year as my 'profit' is probably over £1000 on collectable items, or more on used items such as my own clothing!

Should I be worried?

Can I claim that everything is within the annual CGT allowance for this new rule?

Is this all bluster? Why aren't they going after the bankers??

booneruk

There are no new HMRC/tax rules as far as I understand it.

There's a good MSE article on the subject here: https://www.moneysavingexpert.com/news/2024/01/online-platforms-etsy-vinted-airbnb-report-hmrc/

km1500

there is no tax on selling your own possessions you can sell everything your own and leave yourself just a spoon and fork and not owe tax on anything - even if you sell your possessions for more than you bought them for.

however if you buy things and then sell them i.e sort of run a little mini business then you would be liable for tax on the profit. Not sure the applicable tax would be capital gains tax it would be fall under your income tax schedule

apparently HMRC will write to you if you have more than 30 transactions a year so it is not a value thing but a number of transactions thing

When will HMRC be notified?

The new rules mean that anyone making 30 transactions in one calendar year will likely be flagged as a potential trader. 

It is unclear whether this is 30 transactions per platform or across all online platforms.

It's important to remember that the platforms themselves are not making a call on whether someone is using it as a side hustle, but reporting solely on the number of transactions.

Tallon says: 'The reporting obligations from platforms is about the number of sales. It is not a judgment of whether it's a trade or not a trade, and within the CGT regime. They're not being asked to do that.

'That reporting doesn't mean they're saying you have a trade and HMRC will necessarily take that on. HMRC expects you to report.'

Instead, it is more likely that platforms will notify HMRC of users making more than 30 transactions in a year, and send 'nudge' letters reminding traders that they need to declare income.

Tallon says: 'If you make 30 transactions on a particular platform you should expect a letter from HMRC asking for clarification.'

The tax liabilities for sellers have not changed, but HMRC, via these new rules, will now have a better idea of who is making some extra cash online.

monaymadlol

km1500 said:

there is no tax on selling your own possessions you can sell everything your own and leave yourself just a spoon and fork and not owe tax on anything - even if you sell your possessions for more than you bought them for.

however if you buy things and then sell them i.e sort of run a little mini business then you would be liable for tax on the profit. Not sure the applicable tax would be capital gains tax it would be fall under your income tax schedule

apparently HMRC will write to you if you have more than 30 transactions a year so it is not a value thing but a number of transactions thing

When will HMRC be notified?

The new rules mean that anyone making 30 transactions in one calendar year will likely be flagged as a potential trader. 

It is unclear whether this is 30 transactions per platform or across all online platforms.

It's important to remember that the platforms themselves are not making a call on whether someone is using it as a side hustle, but reporting solely on the number of transactions.

Tallon says: 'The reporting obligations from platforms is about the number of sales. It is not a judgment of whether it's a trade or not a trade, and within the CGT regime. They're not being asked to do that.

'That reporting doesn't mean they're saying you have a trade and HMRC will necessarily take that on. HMRC expects you to report.'

Instead, it is more likely that platforms will notify HMRC of users making more than 30 transactions in a year, and send 'nudge' letters reminding traders that they need to declare income.

Tallon says: 'If you make 30 transactions on a particular platform you should expect a letter from HMRC asking for clarification.'

The tax liabilities for sellers have not changed, but HMRC, via these new rules, will now have a better idea of who is making some extra cash online.

It's a grey area. How long between 'buy things then sell things' is required before it's a business?

And I heard more of a value threshold figure (£1000) rather than number of items.

Does it include personal used clothing too?! Who keeps receipts for that?!

The whole thing is a sham, it won't work, HMRC is in a mess already 

Spoonie_Turtle

monaymadlol said:

km1500 said:

there is no tax on selling your own possessions you can sell everything your own and leave yourself just a spoon and fork and not owe tax on anything - even if you sell your possessions for more than you bought them for.

however if you buy things and then sell them i.e sort of run a little mini business then you would be liable for tax on the profit. Not sure the applicable tax would be capital gains tax it would be fall under your income tax schedule

apparently HMRC will write to you if you have more than 30 transactions a year so it is not a value thing but a number of transactions thing

When will HMRC be notified?

The new rules mean that anyone making 30 transactions in one calendar year will likely be flagged as a potential trader. 

It is unclear whether this is 30 transactions per platform or across all online platforms.

It's important to remember that the platforms themselves are not making a call on whether someone is using it as a side hustle, but reporting solely on the number of transactions.

Tallon says: 'The reporting obligations from platforms is about the number of sales. It is not a judgment of whether it's a trade or not a trade, and within the CGT regime. They're not being asked to do that.

'That reporting doesn't mean they're saying you have a trade and HMRC will necessarily take that on. HMRC expects you to report.'

Instead, it is more likely that platforms will notify HMRC of users making more than 30 transactions in a year, and send 'nudge' letters reminding traders that they need to declare income.

Tallon says: 'If you make 30 transactions on a particular platform you should expect a letter from HMRC asking for clarification.'

The tax liabilities for sellers have not changed, but HMRC, via these new rules, will now have a better idea of who is making some extra cash online.

It's a grey area. How long between 'buy things then sell things' is required before it's a business?

And I heard more of a value threshold figure (£1000) rather than number of items.

Does it include personal used clothing too?! Who keeps receipts for that?!

The whole thing is a sham, it won't work, HMRC is in a mess already 

Intent is the determining factor.

The value threshold is £1,000 gross receipts from trading, above that one has to register for self-assessment to determine whether they need to pay tax on the profit.  This is called the 'trading allowance', if you want to read more about it.

As it's from trading, it does not include selling unwanted personal possessions and clothes.

Nothing is actually changing, these laws and requirements to report trading income have long existed already.  Just some information sharing to make it easier for HMRC to identify people potentially evading reporting what they should.

GDB2222

There is a possible CGT liability on personal possessions if they have gone up in value when you sell them. It depends on the lifespan of the item. If it will normally be expected to last less than 50 years then it is exempt from CGT. Long lasting items are not exempt. That would apply to works of art or jewellery, for example. You obviously only pay tax on the gain, of course. 

Vectis

From what you've said, I would take a guess that you are actually running a small business.

'I've kept receipts for everything' ...Which you would probably only do if you're running a business and working out whether you're making a profit or not. 

You even say 'Occasionally I've sold at a loss' which does seem to indicate that you're buying to make a profit or very, very lucky on the random articles you're buying for yourself and that you're actually checking to see that you've made a profit.

But, there's nothing wrong with any of that. There's nothing wrong with running a small business.

And, as others have said already, nothing is actually changing. You've always been liable for tax over a certain threshold if you're running a small business. It's just that the platforms you use to sell goods on are being told to report what is actually happening.

Will HMRC actually chase up people who sell little more than £1000 worth of goods a year? Unlikely for what might only be a few pounds. But, if you're selling a lot of goods on a regular basis, then they'll probably look on you as a business and they'll expect you to pay tax on the profit you earn. Which, if someone is operating a business, is fair, isn't it?

'The whole thing is a sham, it won't work, HMRC is in a mess already'

I'm not sure how it's a 'sham'? It will probably catch out the people who are running significant businesses and who are not currently paying tax. I'm not sure how or why 'it won't work', either? HMRC will have all the data of what you've earned and you'll be told that you have to file a tax return if you reach the criteria, just like all businesses do.

If you really are only selling items you've bought for your own personal use, then it won't affect you. But, if you are running a business, why shouldn't you pay tax on the profit like most other businesses do?

GadgetGuru

Vectis said:

If you really are only selling items you've bought for your own personal use, then it won't affect you. But, if you are running a business, why shouldn't you pay tax on the profit like most other businesses do?

Just wrote this for another thread, but seems relevant to the above comment:

How does one prove something is a personal possession?

I keep all my original boxes - so lets say I sell an old computer component, back in its original box etc. I only have a single item - not a larger quantity - but I have several items - maybe I'm taking apart my computer to sell the parts.....

Personally, I haven't kept every receipt for every component I've purchased over the past years. Never knew I needed to.

I could get flagged as a potential trader because I've exceeded the 30 threshold, or the value is over £1k in total, but I have no receipts to prove my original purchase even though my case is completely genuine...?

Why should I have to do a tax return 'just in case', for selling my own personal possessions that I have already paid VAT on when purchasing - be it last year, or 10 years ago!

Beginning to think its easier just to let things rot and send stuff to landfill - rather that then give this government any more money over what they take from me already! So much for recycling!

monaymadlol

Thanks for the replies. I don't think this will apply to me. As part of my hobby, I buy speciality / collectable items for my own use. Occasionally I sell them to fund other items, sometimes at a loss, sometimes at a profit. Always under 30 items a month, always within CGT allowance. I'm not a business, and don't feel I need to register for one. Keeping receipts doesn't mean anything other than I like to keep records or paperwork. This rule doesn't affect me.

se2020

GadgetGuru said:

Vectis said:

If you really are only selling items you've bought for your own personal use, then it won't affect you. But, if you are running a business, why shouldn't you pay tax on the profit like most other businesses do?

Just wrote this for another thread, but seems relevant to the above comment:

How does one prove something is a personal possession?

I keep all my original boxes - so lets say I sell an old computer component, back in its original box etc. I only have a single item - not a larger quantity - but I have several items - maybe I'm taking apart my computer to sell the parts.....

Personally, I haven't kept every receipt for every component I've purchased over the past years. Never knew I needed to.

I could get flagged as a potential trader because I've exceeded the 30 threshold, or the value is over £1k in total, but I have no receipts to prove my original purchase even though my case is completely genuine...?

Why should I have to do a tax return 'just in case', for selling my own personal possessions that I have already paid VAT on when purchasing - be it last year, or 10 years ago!

Beginning to think its easier just to let things rot and send stuff to landfill - rather that then give this government any more money over what they take from me already! So much for recycling!

I think the hmrc computer systems will be smart enough to work this out.
Selling all/some of the parts from a gaming pc is common enough as plenty of people build/upgrade computers for a hobby.
Selling a pair (or even 4) graphics Cards would not be unusual. 

However,  if you sell a pair every month or you buy 10 of them from somewhere that has a sale on and put them on ebay to make a few quid they will probably pick up on it.

There is no need/reason to do a tax return "just in case"
Self assessment is always backdated.
So once you reach the required amount of sales you will always have at least 9mths to submit the return from the date of the last sale.

Note that it can take a while (months) to register and get your login details so don't leave it until month 8 to start thinking about it.

Another note, you are supposed to register for self assessment if you intend to do ANY trading and you are supposed to do that by the 5th October in the tax year following when you started trading.

Ie, if you start/started trading between April 23 and April 24 you should register by Oct 24 and submit a return and pay the tax by Jan 2025.

If you start trading in May 2024 then you need to register by Oct 2025 and pay the tax due by Jan 2027.

If you do not register and you are trading but below the allowance you could potentially be fined £100 for failing to submit a return and fined for failing to register.  Even if there is no tax payment due.
If tax was due you will get another fine for failing to pay it. Plus have to pay the tax with interest. 

Spoonie_Turtle

se2020 said:

GadgetGuru said:

Vectis said:

If you really are only selling items you've bought for your own personal use, then it won't affect you. But, if you are running a business, why shouldn't you pay tax on the profit like most other businesses do?

Just wrote this for another thread, but seems relevant to the above comment:

How does one prove something is a personal possession?

I keep all my original boxes - so lets say I sell an old computer component, back in its original box etc. I only have a single item - not a larger quantity - but I have several items - maybe I'm taking apart my computer to sell the parts.....

Personally, I haven't kept every receipt for every component I've purchased over the past years. Never knew I needed to.

I could get flagged as a potential trader because I've exceeded the 30 threshold, or the value is over £1k in total, but I have no receipts to prove my original purchase even though my case is completely genuine...?

Why should I have to do a tax return 'just in case', for selling my own personal possessions that I have already paid VAT on when purchasing - be it last year, or 10 years ago!

Beginning to think its easier just to let things rot and send stuff to landfill - rather that then give this government any more money over what they take from me already! So much for recycling!

Another note, you are supposed to register for self assessment if you intend to do ANY trading 
…

If you do not register and you are trading but below the allowance you could potentially be fined £100 for failing to submit a return and fined for failing to register.  Even if there is no tax payment due.

That is not correct.  The £1,000 threshold, because HMRC essentially disregard it, also means that if you don't go over it, you don't have to register as a sole trader or for self-assessment.

"The trading allowance is a tax exemption of up to £1,000 a year for individuals with trading income from:

• self-employment
• casual services, for example, babysitting or gardening (helpsheet 325 has more information about other taxable income)
• hiring personal equipment, for example, power tools

If your annual gross income from these is £1,000 or less, you do not need to tell HMRC, unless:

• you cannot use the allowances
• you must register for Self Assessment and declare your income on a tax return"

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#trade


https://taxaid.org.uk/guides/information/a-starting-point-for-the-self-employed/self-employed/trading-allowance

https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance#toc-what-if-i-have-trading-income-of-1-000-or-less-