Ebay seller - first ever self assessment

Jumbojumbo

I have just completed my first ever Self Assessment for last tax year. I just want to double check 2 things before submitting to make sure I have understood correctly. For reference I am a buyer and reseller of toys.

1. When I am asked for my turnover, I am giving the figure of the total sales I have made without any deductions.

2. In the expenses part, am I allowed to put the total value of the toys that I have bought (to be resold), or is this not classed as expense? If it isn't, is there another section I should be including this figure?

Many thanks

Dazed_and_C0nfused

Jumbojumbo said:

I have just completed my first ever Self Assessment for last tax year. I just want to double check 2 things before submitting to make sure I have understood correctly. For reference I am a buyer and reseller of toys.

1. When I am asked for my turnover, I am giving the figure of the total sales I have made without any deductions.

2. In the expenses part, am I allowed to put the total value of the toys that I have bought (to be resold), or is this not classed as expense? If it isn't, is there another section I should be including this figure?

Many thanks

1. Yes, you don't deduct anything at that stage.

2. When you say "value" do you mean the amount you paid or something else?   I presume you have discounted using the Trading Allowance?

Jumbojumbo

Dazed_and_C0nfused said:

Jumbojumbo said:

I have just completed my first ever Self Assessment for last tax year. I just want to double check 2 things before submitting to make sure I have understood correctly. For reference I am a buyer and reseller of toys.

1. When I am asked for my turnover, I am giving the figure of the total sales I have made without any deductions.

2. In the expenses part, am I allowed to put the total value of the toys that I have bought (to be resold), or is this not classed as expense? If it isn't, is there another section I should be including this figure?

Many thanks

1. Yes, you don't deduct anything at that stage.

2. When you say "value" do you mean the amount you paid or something else?   I presume you have discounted using the Trading Allowance?

Great thank you.

When I say value I mean the total amount I paid for the toys. So lets say I had £6000 turnover. But the toys cost me £4000. Do I enter this £4000 figure as my expenses? I'm unclear as to whether it counts as an expense.

I've just read up on the Trading Allowance, I thought this wasnt applicable to me since my sales were over £1000 but I think I may have misunderstood this and it can still be subtracted from the turnover? But it seems I can't claim both, so in the above example I would be better off claiming the £4000 as expenses?

LITRG

Hello. We are the Low Incomes Tax Reform Group (LITRG), part of the Chartered Institute of Taxation who are an educational charity. We are not part of HMRC or MSE. Although we can’t give individual advice, you might find our website information about how you can use the trading allowance if your gross income is more than £1000, useful: https://www.litrg.org.uk/working/self-employment/trading-allowance#3. If you require further help, we recommend that you contact a tax adviser, HMRC or one of the tax charities where relevant. You can find more information about where to get help with tax here: https://www.litrg.org.uk/tax-nic/getting-help-tax. Thanks

sheramber

Jumbojumbo said:

Dazed_and_C0nfused said:

Jumbojumbo said:

I have just completed my first ever Self Assessment for last tax year. I just want to double check 2 things before submitting to make sure I have understood correctly. For reference I am a buyer and reseller of toys.

1. When I am asked for my turnover, I am giving the figure of the total sales I have made without any deductions.

2. In the expenses part, am I allowed to put the total value of the toys that I have bought (to be resold), or is this not classed as expense? If it isn't, is there another section I should be including this figure?

Many thanks

1. Yes, you don't deduct anything at that stage.

2. When you say "value" do you mean the amount you paid or something else?   I presume you have discounted using the Trading Allowance?

Great thank you.

When I say value I mean the total amount I paid for the toys. So lets say I had £6000 turnover. But the toys cost me £4000. Do I enter this £4000 figure as my expenses? I'm unclear as to whether it counts as an expense.

I've just read up on the Trading Allowance, I thought this wasnt applicable to me since my sales were over £1000 but I think I may have misunderstood this and it can still be subtracted from the turnover? But it seems I can't claim both, so in the above example I would be better off claiming the £4000 as expenses?

yes. £4000 expenses deducted is better than £100 deducted.

Bookworm105

the SA form requires you to
A )  declare your turnover - ie "gross" value of sales excluding any deductions
B )  declare your costs being i) price paid to purchase your trading (sales) item and ii) any fees incurred for selling (eBay, PayPal etc) iii) any shipping costs paid when despatching the sold items

It is a fundamental principle of a tax return that you never declare a net value (ie income net of costs) as the whole point of the exercise is to show how much income you got and where you spent it as separate amounts so "they" can monitor your business for "oddities"

As others note, with cost >£1,000 it would be pointless claiming the trading allowance as your cost are substantially more than that

the SA return will then calculate a) - b) = your taxable profit 

MetaPhysical

Bookworm105 said:

the SA form requires you to
A )  declare your turnover - ie "gross" value of sales excluding any deductions
B )  declare your costs being i) price paid to purchase your trading (sales) item and ii) any fees incurred for selling (eBay, PayPal etc) iii) any shipping costs paid when despatching the sold items

It is a fundamental principle of a tax return that you never declare a net value (ie income net of costs) as the whole point of the exercise is to show how much income you got and where you spent it as separate amounts so "they" can monitor your business for "oddities"

As others note, with cost >£1,000 it would be pointless claiming the trading allowance as your cost are substantially more than that

the SA return will then calculate a) - b) = your taxable profit 

That is exactly what I did to help with my fiancee complete her return.

I also did this across all platforms (i.e. eBay, Etsy, Vinted etc).  I added up all the GROSS sales from each and used that number as the total turnover.  Equals A.

I then entered ALL costs - i.e. cost to buy the stuff to sell on, postage, platform fees, packing, stationary costs etc AND I also added the simplified expenses for mileage to collect her stuff from wholesalers and to the Post Office to post it and use of a room in her home.  That gives the total costs.  Equals B.

Your profit is then A - B = X.  X is what you will be taxed (and pay NI) on.

That's what I am going to submit. I have all the numbers for inspection by HMRC if needed.