eBay and Etsy Side hustle tax

MetaPhysical

I've got it guys.  It's just the confusion over the trading allowance and how that worked that was stumping me a bit.  I get it now.  Many thanks.

MetaPhysical

Ok, another one.  The online trading platforms will start to report the numbers accrued from January this year - 2024 - and will report them to HMRC in Jan 2025.  That crosses two tax years.  Will HMRC in 2025 only want to see the numbers in that TAX YEAR starting April 2024 since the report will also include four months of tax year 2023/2024???  Similarly will these four months need to go on the tax return for 2023-2024?  She started in November 2023 by the way.

MetaPhysical

[Deleted User] said:

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.

Calm it down.  I am getting it and I am grateful for the assistance.  As I said, the difference between the allowance and the expenses and when the allowance was applied was throwing me a bit.  Thanks to you and to everyone's help and explanations. I now get it.  Thank you.

[Deleted User]

MetaPhysical said:

Ok, another one.  The online trading platforms will start to report the numbers accrued from January this year - 2024 - and will report them to HMRC in Jan 2025.  That crosses two tax years.  Will HMRC in 2025 only want to see the numbers in that TAX YEAR starting April 2024 since the report will also include four months of tax year 2023/2024???  Similarly will these four months need to go on the tax return for 2023-2024?  She started in November 2023 by the way.

She reports what she earned during the period from November 2023 to 5th April 2024. 

What is or is not reported to HMRC is not relevant. 

DullGreyGuy

MetaPhysical said:

I've got it guys.  It's just the confusion over the trading allowance and how that worked that was stumping me a bit.  I get it now.  Many thanks.

Just play the numbers out...

£6,000 revenue, less £1,000 trading allowance = £5,000 profit x 20% basic tax rate = £1,000 tax 

£6,000 revenue, less £400 expenses = £5,600 profit x 20% basic tax rate = £1,120 tax 

So any expenses under £1,000 will result in you paying more tax than using the trading allowance. 

There are elements of tax that are complex, despite HMRC's "tax doesn't have to be taxing" however much of it is just maths (or Math if you are in Northern Ireland) 

[Deleted User]

DullGreyGuy said:

MetaPhysical said:

I've got it guys.  It's just the confusion over the trading allowance and how that worked that was stumping me a bit.  I get it now.  Many thanks.

Just play the numbers out...

£6,000 revenue, less £1,000 trading allowance = £5,000 profit x 20% basic tax rate = £1,000 tax 

£6,000 revenue, less £400 expenses = £5,600 profit x 20% basic tax rate = £1,120 tax 

So any expenses under £1,000 will result in you paying more tax than using the trading allowance. 

There are elements of tax that are complex, despite HMRC's "tax doesn't have to be taxing" however much of it is just maths (or Math if you are in Northern Ireland) 

It’s definitely Maths in NI. Never heard Math used here! 

MetaPhysical

...I have a degree in Maths and Physics, so that bit doesn't scare me.  HMRC and the way their rules work is what scares me and what I needed clarification on!  Many thanks again, I completely understand now  

DullGreyGuy

[Deleted User] said:

DullGreyGuy said:

MetaPhysical said:

I've got it guys.  It's just the confusion over the trading allowance and how that worked that was stumping me a bit.  I get it now.  Many thanks.

Just play the numbers out...

£6,000 revenue, less £1,000 trading allowance = £5,000 profit x 20% basic tax rate = £1,000 tax 

£6,000 revenue, less £400 expenses = £5,600 profit x 20% basic tax rate = £1,120 tax 

So any expenses under £1,000 will result in you paying more tax than using the trading allowance. 

There are elements of tax that are complex, despite HMRC's "tax doesn't have to be taxing" however much of it is just maths (or Math if you are in Northern Ireland) 

It’s definitely Maths in NI. Never heard Math used here! 

Really? Our two flatmates at uni always called it math... one always used to order "chip" at the chippy and the Scottish staff always enjoyed serving him a single chip wrapped in extra paper. Maybe it was the just the two of them but one was from Lisbon, the other from Derry (certainly not Londonderry) and didnt know each other beforehand.  

eskbanker

DullGreyGuy said:
...one was from Lisbon...

Portuguese then?

[Deleted User]

DullGreyGuy said:

[Deleted User] said:

DullGreyGuy said:

MetaPhysical said:

I've got it guys.  It's just the confusion over the trading allowance and how that worked that was stumping me a bit.  I get it now.  Many thanks.

Just play the numbers out...

£6,000 revenue, less £1,000 trading allowance = £5,000 profit x 20% basic tax rate = £1,000 tax 

£6,000 revenue, less £400 expenses = £5,600 profit x 20% basic tax rate = £1,120 tax 

So any expenses under £1,000 will result in you paying more tax than using the trading allowance. 

There are elements of tax that are complex, despite HMRC's "tax doesn't have to be taxing" however much of it is just maths (or Math if you are in Northern Ireland) 

It’s definitely Maths in NI. Never heard Math used here! 

Really? Our two flatmates at uni always called it math... one always used to order "chip" at the chippy and the Scottish staff always enjoyed serving him a single chip wrapped in extra paper. Maybe it was the just the two of them but one was from Lisbon, the other from Derry (certainly not Londonderry) and didnt know each other beforehand.  

I presume you mean Lisburn! 😁. No - never heard it - but only lived here for forty-three years! 

Yes - ‘a chip’ is NI speak for a portion of chips!