I sell only my own assets at a loss, but more than 30 per year. Do I need to tell HMRC?

Madmonkeymayhem

I am a very active ebayer. Everything I buy for myself or home will usually end up on ebay once I'm done with it. Electronics, homeware, clothing - if it's worth selling then I'll sell it. 95% of what I sell is used goods of my own which I sell at a loss compared to what I paid for it, with the occasional 'profit' sale of something like a high value pokemon card which my son collects. Consequently I complete a relatively high number of sales on ebay for a private seller. Over the 2023 calendar year I made 77 sales and the total of all of those before fees was nearly £5k. My question is where does this leave me in terms of my obligation to report the sales to HMRC? I dont sell high value goods above £6k so I know I do not have to pay capital gains, but from what I can tell I am considered by HMRC to be 'trading' because I make more than 30 sales per year and earn more than £1000 in 'profit'. As I am almost exclusively selling my own assets at a loss, I am technically not making any profit, but is the burden on me to prove this?

TimeLord1

You can also check guidance calculator below. 




https://www.gov.uk/check-additional-income-tax

DullGreyGuy

Madmonkeymayhem said:

I am a very active ebayer. Everything I buy for myself or home will usually end up on ebay once I'm done with it. Electronics, homeware, clothing - if it's worth selling then I'll sell it. 95% of what I sell is used goods of my own which I sell at a loss compared to what I paid for it, with the occasional 'profit' sale of something like a high value pokemon card which my son collects. Consequently I complete a relatively high number of sales on ebay for a private seller. Over the 2023 calendar year I made 77 sales and the total of all of those before fees was nearly £5k. My question is where does this leave me in terms of my obligation to report the sales to HMRC? I dont sell high value goods above £6k so I know I do not have to pay capital gains, but from what I can tell I am considered by HMRC to be 'trading' because I make more than 30 sales per year and earn more than £1000 in 'profit'. As I am almost exclusively selling my own assets at a loss, I am technically not making any profit, but is the burden on me to prove this?

HMRC doesn't say that selling over £1,000 in revenue (not profit, eBay cannot judge profit) or 30 items means you are a trader... just at that sort of volume you might be and so they want data to double check. 

You are selling your own possessions, you are buying to use not to resell for a profit and so are not a trader. Yes your data will be sent to HMRC but chances are they'll see you are just flogging your stuff, worst case, they ask a few questions. Those that sold 30 identical t-shirts other than they are in sizes ranging from XS to XXL are the ones that have something to worry about 

soolin

If I can find one of the other threads I’ll ask the forum team to merge this rather than have another thread repeating the same info again.

Basically though nothing has changed, there is no new tax rules, personal sales are not subject to income tax . 

TimeLord1

The £1000, limit is if you're buying to sell for profits then you need to register as a business account. But if you're clearing a collection or loft then that is private selling. 

TimeLord1

What would make most sense is if ebay had capped cut off levels but they won't because people are making them money. 

DullGreyGuy

TimeLord1 said:

What would make most sense is if ebay had capped cut off levels but they won't because people are making them money. 

Why would eBay cap me selling my 500 CDs/LPs individually to 30 per year. What happens if I listed all of them at the same time? They allow the first 30 payers to go through then rescind the sale for the others?

You are free to sell as much of your own junk a year as you want, you were before these changes and are still now.

TimeLord1

No caps if you hit profit margins similar to top rated seller and I think 100 sales if they done something similar to stop people hitting Gains and Tax brackets then it would help people more. But currently once you sell 30 items they'll inform HMRC of this activity and if you make over £1700, so why not cap them instead of secretly passing over the information. I think they must've done a deal with HMRC so they themselves don't pay up. Wasn't us Gov they done it, we just allowed them. 

TimeLord1

What some people are getting is their bank accounts if they're just personal use and the bank sees an income regularly they write to them to say' we need to close this account as we believe it's being used for business and not personal use. So it can happen that way also that was an eBay community thread people making items to sell. 

soolin

TimeLord1 said:

No caps if you hit profit margins similar to top rated seller and I think 100 sales if they done something similar to stop people hitting Gains and Tax brackets then it would help people more. But currently once you sell 30 items they'll inform HMRC of this activity and if you make over £1700, so why not cap them instead of secretly passing over the information. I think they must've done a deal with HMRC so they themselves don't pay up. Wasn't us Gov they done it, we just allowed them. 

I think you are misunderstanding what the reporting actually means- and that's a reason I didn't want yet another thread started on this subject which just causes confusion.

Online sites have always passed information to HMRC, the difference is that now it is being done automatically not on an ad hoc basis or at HMRC request. I'm not sure why you think this is secret? There's been enough information everywhere saying it is happening for most people to be aware, so hardly secret.

I don't really understand the reasoning behind limiting private sales either- that is sounding a little bit 'big brother' to me with people being limited to how much of their personal stuff some faceless Government official decides is good for them to sell . If I want to sell off several decades of my hoarded junk treasure then I feel I am adult and intelligent enough to understand that my sales will be reported to HMRC, who I fully suspect will not care a bean about it- as with millions of reports going in every year they aren't even going to see it.

As for businesses, nothing has changed there either , along with most people I declare my income from trading, perhaps I am having my details passed across or maybe I'm not- but again I know what I've made and I know when it needed to be declared- so nothing has changed. There are some people who don't declare their income, no doubt there always will be, do I think they will all suddenly get letters from HMRC demanding money? More likely is that it will carry on exactly as before and HMRC will keep busy dealing with unregistered businesses being turned in on an hourly basis by friends, colleagues and relatives- just as they always did.

BTW it isn't just ebay that is passing over this information- it's anywhere that allow trading - so etsy. Amazon, Vinted etc. Do you think they are all in a secret covert group conspiring against the common man to frighten us all into keeping all our old junk or sending it to landfill rather than selling it? It makes no odds to ebay really whether we pay taxes or not- they don't take income tax from our sales, whether private or business. 

TimeLord1

By all means link it up to previous thread I would like to read it. I didn't open the thread but used mostly ebay statements and Gov link to the calculator to help people. As for secretly ebay won't message people to say we've sent your yearly sales report over to HMRC as required by law. And I believe it will be software that processes all the information it receives from online selling platforms. I'll check back when this is moved to the existing thread.