Losses on eBay Goods - tax relief?

regency_man

I primarily earn through PAYE but on the side I buy from bulk liquidation auctions and sell the items on eBay.  It's never made me a huge amount, max ~£5k in a year, but like a good citizen I've been reporting my profits on my tax return each year as other income.  However this year I've made a few bad buys and I'm actually out of pocket for the year.  Mainly it was a bulk purchase of 150 digital cameras that I thought would fly off the shelves but even discounting them to below the price I paid for them, they are still not selling.

As a personal trader am I able to 'write off' these cameras and somehow offset this against my overall tax bill?  What section does this go in on the self assessment form?

TheSpectator

regency_man said:

I primarily earn through PAYE but on the side I buy from bulk liquidation auctions and sell the items on eBay.  It's never made me a huge amount, max ~£5k in a year, but like a good citizen I've been reporting my profits on my tax return each year as other income.  However this year I've made a few bad buys and I'm actually out of pocket for the year.  Mainly it was a bulk purchase of 150 digital cameras that I thought would fly off the shelves but even discounting them to below the price I paid for them, they are still not selling.

As a personal trader am I able to 'write off' these cameras and somehow offset this against my overall tax bill?  What section does this go in on the self assessment form?

What do you mean by 'this year'?

regency_man

TheSpectator said:

What do you mean by 'this year'?

Sorry, good clarification.  The last tax year 2023-2024 (the one I'm about to do the tax return for).

Nomunnofun1

regency_man said:

TheSpectator said:

What do you mean by 'this year'?

Sorry, good clarification.  The last tax year 2023-2024 (the one I'm about to do the tax return for).

Losses can be set against other income given certain criteria. Unfortunately the main one would be that you must be registered as self-employed which, by your own admission, you haven’t. 

The deadline for registering for 2023/24 self-employed income was 5th October 2024. 

DullGreyGuy

regency_man said:

I primarily earn through PAYE but on the side I buy from bulk liquidation auctions and sell the items on eBay.  It's never made me a huge amount, max ~£5k in a year, but like a good citizen I've been reporting my profits on my tax return each year as other income.  However this year I've made a few bad buys and I'm actually out of pocket for the year.  Mainly it was a bulk purchase of 150 digital cameras that I thought would fly off the shelves but even discounting them to below the price I paid for them, they are still not selling.

As a personal trader am I able to 'write off' these cameras and somehow offset this against my overall tax bill?  What section does this go in on the self assessment form?

It depends... most sole traders do cash accounting, and it's about to become the default, with cash accounting you cannot use self employed losses on PAYE. If you are using accrual/traditional accounting then you can but under traditional accounting you may not have made a loss seeing as you are still holding the stock.

regency_man

DullGreyGuy said:

It depends... most sole traders do cash accounting, and it's about to become the default, with cash accounting you cannot use self employed losses on PAYE. If you are using accrual/traditional accounting then you can but under traditional accounting you may not have made a loss seeing as you are still holding the stock.

I've no idea what kind of accounting I do.  On my tax return I normally just take what I've made from eBay (proceeds) and subtract from that my costs (of the items and the postage and eBay's fees) then put that as 'other income' on the tax return.

What is the formal process of writing off the stock?  Do I actually need to destroy it?  I don't think they are ever going to sell, but I might be able to give them to a charity.

regency_man

Nomunnofun1 said:

regency_man said:

TheSpectator said:

What do you mean by 'this year'?

Sorry, good clarification.  The last tax year 2023-2024 (the one I'm about to do the tax return for).

Losses can be set against other income given certain criteria. Unfortunately the main one would be that you must be registered as self-employed which, by your own admission, you haven’t. 

The deadline for registering for 2023/24 self-employed income was 5th October 2024. 

So I can be self-employed AND PAYE employed at the same time?

Nomunnofun1

regency_man said:

Nomunnofun1 said:

regency_man said:

TheSpectator said:

What do you mean by 'this year'?

Sorry, good clarification.  The last tax year 2023-2024 (the one I'm about to do the tax return for).

Losses can be set against other income given certain criteria. Unfortunately the main one would be that you must be registered as self-employed which, by your own admission, you haven’t. 

The deadline for registering for 2023/24 self-employed income was 5th October 2024. 

So I can be self-employed AND PAYE employed at the same time?

Yes - as has always been the case. 

However, the point that I was making is that you need to have registered for self-employment in respect of 2023/24 by 5th October 2024 which has passed. 

Even if you were I presume that you are using the cash basis? If so you can only carry losses forward against the same trade. 

regency_man

Nomunnofun1 said:

Even if you were I presume that you are using the cash basis? If so you can only carry losses forward against the same trade. 

What does that mean, in layman's terms?  I can count it as a loss against my future years eBay trading but not against my PAYE income tax?

So if I make a loss of £1500 for the 23/34 year I just record that as £0 'other income' on the 23/24 tax return, then saying I make £2000 profit from eBay in 24/25 then I subtract the £1500 from it and only report it as £500 'other income' on the 24/25 tax return?

sheramber

You should not be entering  the Ebay profit as 'other income'.

You register as self employed and complete the self employed pages of the self assessment return.   

You select these pages where you select the employed pages. Yes you can be self employed and employed.

These  pages allow you to show your loss to be carried forward to  next year.

regency_man

I always assumed 'self employed' meant you're running a business where you're paying yourself a wage?

Is it ultimately in my benefit to register as self-employed then?  I assume I can just carry my current loss on the cameras over to 24/25 and register as self employed for this year?