HMRC ruling on eBay/ Etsy etc

RFW

JamTomorrow said:

I suspect our sales will exceed the HMRC criteria on both volume and value and whilst primarily made up of reselling our old items it will also include a few flips of charity shop and car boot purchases.  Can losses on reselling of old items be offset against profits on flipped items?

As said above you can't set off losses from one, especially if they are used. As said elsewhere, and by HMRC, there is nothing new happening. If you are trading then you should declare as such. It could be worth a chat with an accountant who could tell you what you need to declare and if you could offset certain things. £100 spent with a decent accountant could potentially save you a few thousand per year. I'd wait until the end of January though. Most decent accountants won't be coming up for air until after Jan 31st.

jaywood

Apologies if this has already been addressed in another thread but I have a few questions regarding this as the recent news has got me slightly twitchy and unsure of myself:

As a hobby I collect reasonably expensive art prints (ranging from ££ to £££) and regularly sell them on eBay to free up space when my portfolios are at bursting point. Over the last two years I have been making more of an effort to sell prints so i can replace some funds i took out of my savings during covid lockdowns. Now assuming I sell these prints at just a smidge over the original price I paid, just 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 the profit I make?

Thanks in advance.

RFW

jaywood said:

Apologies if this has already been addressed in another thread but I have a few questions regarding this as the recent news has got me slightly twitchy and unsure of myself:

As a hobby I collect reasonably expensive art prints (ranging from ££ to £££) and regularly sell them on eBay to free up space when my portfolios are at bursting point. Over the last two years I have been making more of an effort to sell prints so i can replace some funds i took out of my savings during covid lockdowns. Now assuming I sell these prints at just a smidge over the original price I paid, just 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 the profit I make?

Thanks in advance.

If you are selling products you purchased without intending to sell them then you aren't a trader. If you do purchase with the intention of selling, at some point in the future, then you are a trader. The amounts involved are irrelevant, with the possible exception of capital gains tax.

There's a lot of help being given on here and it varies in quality. Can I suggest that you get independent professional advice. You can also call HMRC, although be prepared to wait. They seem to be fairly responsive on Twitter too.

Grumpy_chap

JamTomorrow said:

I suspect our sales will exceed the HMRC criteria on both volume and value and whilst primarily made up of reselling our old items it will also include a few flips of charity shop and car boot purchases.  Can losses on reselling of old items be offset against profits on flipped items?

As a higher rate taxpayer it probably makes sense now for us to either set up a new eBay account in my Wife's name  (she is doing most of the ebay sales anyway and has no earnings so any ebay income would be nil rate band) 

Just for clarity, the actual tax rules have not changed.
If you were / are flipping greater than £1k per year currently, then you are trading and should have declared that revenue as business income and the associated profit.  That part is unchanged.
Selling your own old stuff is not trading and does not count towards the £1k per year.

jaywood

RFW said:

jaywood said:

Apologies if this has already been addressed in another thread but I have a few questions regarding this as the recent news has got me slightly twitchy and unsure of myself:

As a hobby I collect reasonably expensive art prints (ranging from ££ to £££) and regularly sell them on eBay to free up space when my portfolios are at bursting point. Over the last two years I have been making more of an effort to sell prints so i can replace some funds i took out of my savings during covid lockdowns. Now assuming I sell these prints at just a smidge over the original price I paid, just 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 the profit I make?

Thanks in advance.

If you are selling products you purchased without intending to sell them then you aren't a trader. If you do purchase with the intention of selling, at some point in the future, then you are a trader. The amounts involved are irrelevant, with the possible exception of capital gains tax.

There's a lot of help being given on here and it varies in quality. Can I suggest that you get independent professional advice. You can also call HMRC, although be prepared to wait. They seem to be fairly responsive on Twitter too.

Thanks, I just find the rules so ambiguous in terms of what classifies the criteria shown above in bold: if you buy something and just happen to sell it in the future, couldn’t that in theory define you as a trader? Are HMRC going to need something more to prove my intentions when buying something? For instance what if you preorder something and then find that by the time it arrives you no longer can keep it? It all seems too vague to understand fully.

se2020

jaywood said:

RFW said:

jaywood said:

Apologies if this has already been addressed in another thread but I have a few questions regarding this as the recent news has got me slightly twitchy and unsure of myself:

As a hobby I collect reasonably expensive art prints (ranging from ££ to £££) and regularly sell them on eBay to free up space when my portfolios are at bursting point. Over the last two years I have been making more of an effort to sell prints so i can replace some funds i took out of my savings during covid lockdowns. Now assuming I sell these prints at just a smidge over the original price I paid, just 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 the profit I make?

Thanks in advance.

If you are selling products you purchased without intending to sell them then you aren't a trader. If you do purchase with the intention of selling, at some point in the future, then you are a trader. The amounts involved are irrelevant, with the possible exception of capital gains tax.

There's a lot of help being given on here and it varies in quality. Can I suggest that you get independent professional advice. You can also call HMRC, although be prepared to wait. They seem to be fairly responsive on Twitter too.

Thanks, I just find the rules so ambiguous in terms of what classifies the criteria shown above in bold: if you buy something and just happen to sell it in the future, couldn’t that in theory define you as a trader? Are HMRC going to need something more to prove my intentions when buying something? For instance what if you preorder something and then find that by the time it arrives you no longer can keep it? It all seems too vague to understand fully.

Nothing ambiguous about it.
Trading is buying with the intention to sell for a profit.
99% of the stuff you "happen  to sell" or "no longer can keep" will not make a profit. Occasionally you will get lucky and make a profit,  just don't get lucky on every item.

Miser1964

jaywood said:

As a hobby I collect reasonably expensive art prints (ranging from ££ to £££) and regularly sell them on eBay to free up space when my portfolios are at bursting point. 

Review the tests HMRC use to determine if someone is 'trading' BIM20205 - Meaning of trade: badges of trade: summary - HMRC internal manual - GOV.UK (www.gov.uk). After April 2025, might get a letter from them to ask if you're OK with your declared tax, based on -

- An intention to make a profit supports trading, but by itself is not conclusive.
- Systematic and repeated transactions
- Existence of similar trading transactions
- Assets that are the subject of trade will normally, but not always, be sold quickly.

EnPointe

Spoonie_Turtle said:

ablfc said:

So to be on the safe side, do a self assessment form in case you sell a bit more than £1.000 on eBay etc even if it’s old toys or personal belongings. Thanks for all the help. 

NO, completely unnecessary. 
You only need to do a self-assessment if it's from trading.  Don't start paying the government more of your time and money just because the reporting around this has been so awful.

The whole at what point does it cross over from being a  hobby / interest  and become trading has  been a problem  for a long time ,. just  selling on Ebay ( or vinted or  various other sites)  has become  more and more common and is seen to some extent as an easy way to  evade detection (  vs  doing  drop shipping / FBA  sales on amazon or  setting up an Etsy store) 

there have always bene been peopel who have skated the lines  on ' are you a trader or not?'   in antiques,  collectables  /  records etc  as well as some of the car boot sale regulars ...   i know  peopel who had  these  discussions with  HMRC  20 + years ago becasue they  were not only  going to  antique fairs / record fairs but  more than occasionally  having a table   to sell  from   as well as buying and selling on ebay ... 

Spoonie_Turtle

EnPointe said:

Spoonie_Turtle said:

ablfc said:

So to be on the safe side, do a self assessment form in case you sell a bit more than £1.000 on eBay etc even if it’s old toys or personal belongings. Thanks for all the help. 

NO, completely unnecessary. 
You only need to do a self-assessment if it's from trading.  Don't start paying the government more of your time and money just because the reporting around this has been so awful.

The whole at what point does it cross over from being a  hobby / interest  and become trading has  been a problem  for a long time ,. just  selling on Ebay ( or vinted or  various other sites)  has become  more and more common and is seen to some extent as an easy way to  evade detection (  vs  doing  drop shipping / FBA  sales on amazon or  setting up an Etsy store) 

there have always bene been peopel who have skated the lines  on ' are you a trader or not?'   in antiques,  collectables  /  records etc  as well as some of the car boot sale regulars ...   i know  peopel who had  these  discussions with  HMRC  20 + years ago becasue they  were not only  going to  antique fairs / record fairs but  more than occasionally  having a table   to sell  from   as well as buying and selling on ebay ... 

The person to whom I was replying doesn't appear to be in a grey area though.  They said:
"So to be on the safe side, do a self assessment form in case you sell a bit more than £1.000 on eBay etc even if it’s old toys or personal belongings."
For that situation it would be completely unnecessary.

RFW

se2020 said:

jaywood said:Thanks, I just find the rules so ambiguous in terms of what classifies the criteria shown above in bold: if you buy something and just happen to sell it in the future, couldn’t that in theory define you as a trader? Are HMRC going to need something more to prove my intentions when buying something? For instance what if you preorder something and then find that by the time it arrives you no longer can keep it? It all seems too vague to understand fully.

Nothing ambiguous about it.
Trading is buying with the intention to sell for a profit.
99% of the stuff you "happen  to sell" or "no longer can keep" will not make a profit. Occasionally you will get lucky and make a profit,  just don't get lucky on every item.

I agree on the ambiguity, or lack of. I looked into this a few years ago and, as I understood, it is in the moment of you purchasing or making an item that matters. So if I go into a shop and buy a t-shirt for a fiver and think I can sell it for £20 then I'm a trader. If I think that might go with the hat I bought last week, I'll wear that, then get home find it doesn't fit and sell it, then I'm not a trader. Now how anyone can prove what I thought at the time of purchase is hard to fathom, but if I happen to be buying 200 t-shirts/week in the faint hope that one of them might match my new hat then someone may twig that I'm a trader.

Can I urge everyone to read the MSE report on this. There are no new rules from HMRC as they have said on Twitter and elsewhere. The reporting is of 30 items or more than the equivalent of 2000Euros in turnover (currently around £1700). This is to do with an international law UK government have signed up to to counter international tax evasion. HMRC don't really care if you take £30 per week selling your old tat on Ebay.