eBay and Etsy Side hustle tax

[Deleted User]

MetaPhysical said:

So if you bought a ton of widgets at £10 each, you sold them for £15 and incurred costs in sale of £3 (postage, packing, printing you own capital costs for shelving etc), your profit is £2 on the Tax Return right?  So what details would HMRC want to know here?  I thought it would simply be total gross sales, total profit and expenses.

Is the shelving in that example not an expense?  Is refunding a purchaser an expense|? Is driving to the Post Office to post them not an expense and deductible from the profit totals?  IS keeping the house from being the Arctic Tundra whilst doing this an expense?

Read my previous post. Does she want to claim the trading allowance OR actual expenses?

MetaPhysical

I think I get it (finally).  You deduct the £1000 trading allowance from your PROFIT.  Not your sales?  So the trading allowance is really worth £1000 to your pocket?.

[Deleted User]

MetaPhysical said:

I think I get it (finally).  You deduct the £1000 trading allowance from your PROFIT.  Not your sales?  So the trading allowance is really worth £1000 to your pocket?.

Nope. Absolutely not! It reduces your PROFIT by £1000 saving tax of £200. 

If you have little or no expenses clearly the ability to claim £1000 is beneficial.

So we could have - Gross Profit £5000 less trading allowance £1000 - net profit £4000.

OR

Gross profit £5000 less actual expenses £1500 - net profit £3500.

DullGreyGuy

You'd have revenue of 15 and costs of 13 thus a net profit of 2

Shelving is another capital purchase as ultimately you can resell them and retain a value. 

A refund is a reverse sale, negative revenue, not an expense. 

Getting to the post office is an expense, might want to check if RM will collect is cheaper

I personally steer clear of anything home related, difficult to prove what is purely business, laptops etc cost a few pounds a year to run and have seen people have big issues after claiming expenses for home and then one had to knock down a home office in the garden, another had to pay capital gains tax when they sold their home as they'd said it was 25% business use so no domestic exemption for that component etc

BoGoF

At this level of understanding I'd be suggesting an accountant.

MetaPhysical

So if your expenses are MORE than £200 then it makes sense to go the expenses route and forget the £1000 allowance.

DullGreyGuy

MetaPhysical said:

So if your expenses are MORE than £200 then it makes sense to go the expenses route and forget the £1000 allowance.

If your expenses are more than £1,000 then its worth going actual expenses

swingaloo

Im another who would suggest an accountant.  They can save you as much as you pay them as they know exactly what can be claimed and what cant.  Just out of interest, why does she have to go to the Post Office twice a day?

Dazed_and_C0nfused

MetaPhysical said:

So if your expenses are MORE than £200 then it makes sense to go the expenses route and forget the £1000 allowance.

No.

Personally I would prefer to deduct £1,000 trading allowance from my turnover instead of say £700 actual expenses.

Note you deduct the expenses or trading allowance from your turnover, not your profit.

Profit is what is left after deducting expenses or the trading allowance.

[Deleted User]

MetaPhysical said:

So if your expenses are MORE than £200 then it makes sense to go the expenses route and forget the £1000 allowance.

You are really not getting this!

Do you want to claim £1000 worth of expenses as a deduction against profits or do you want to claim the actual expenses (if more than £1000)?

That’s it! No £200 cash refund! No £1000 cash refund! Just a shortcut.