Suddenly close to ebay tax threshold

rundmc-k

I apologise if this has been covered a lot, I have had a good look through the forum and haven't been completely sure as to the answer:

My wife has sold personal possessions on ebay throughout the year just to get rid of stuff in the house- no issue. However an item she sold got quite a good return and she realised that if she bought a few more, she could get a decent return on these items. So therefore she essentially started trading. Her income from that in the last few months is approaching £1k

My question is... if she goes over £1k from those items, is that when she would need to declare it to HMRC?
Also, she gives 10% of the sales of everything she lists to charity, so would you remove that 10% when adding up the income earned?

Thankyou for any advice on this

Peter999_2

You don't have to pay any tax on personal possesions that you sell, not sure why you would think that.   If you are buying things and then selling them intending to make a profit then that is different.      How much was the item that sold for a lot?  If it was more than £6,000 you could have to pay Capital Gains Tax.

Spoonie_Turtle

rundmc-k said:

I apologise if this has been covered a lot, I have had a good look through the forum and haven't been completely sure as to the answer:

My wife has sold personal possessions on ebay throughout the year just to get rid of stuff in the house- no issue. However an item she sold got quite a good return and she realised that if she bought a few more, she could get a decent return on these items. So therefore she essentially started trading. Her income from that in the last few months is approaching £1k

My question is... if she goes over £1k from those items, is that when she would need to declare it to HMRC?
Also, she gives 10% of the sales of everything she lists to charity, so would you remove that 10% when adding up the income earned?

Thankyou for any advice on this

Yes, if her gross receipts from selling them reach £1,000 in the tax year then really she would need to register.  

The reason it's gross receipts rather than after fees is £1,000 is the trading allowance:  
You can choose to calculate actual expenses to work out actual profit which is taxable (if with other income it goes over the personal allowance threshold for income tax). 
Or, the trading allowance is writing off the first £1,000 received insteas of calculating expenses, and anything over that is taken as taxable profit.  For a lot of very small traders this is vastly preferable and means they can deduct much more than their actual expenses.

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

Or if she doesn't want to deal with it, she could decide to pause selling these items (and anything else bought to resell, i.e. trading) for a little bit to stay under the £1,000 until the new tax year.  Selling personal possessions, as you rightly say, doesn't count so she can keep going with those regardless.

rundmc-k

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

GadgetGuru

I sell privately - just my own IT related stuff. Some are gifts or freebies from companies I have no receipts for. But IT stuff can be expensive. eBay reports I've made over £3k in the last 90 days. I do not buy to resell - it's all literally one off items.
Must admit - I'm a little nervous come next month, but lets see what happens.......

GadgetGuru

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

I dont see why not, but you never know with HMRC. They'll screw you no matter what you do. 

Spoonie_Turtle

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

GadgetGuru said:

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

I dont see why not, but you never know with HMRC. They'll screw you no matter what you do. 

No as it would still be income from her trading, the £1,000 applies to all sources of trading income.  If she were self-employed with two businesses she'd include both on a self-assessment, this is no different and if she thought using a different account meant she didn't have to declare anything that would be fraud.

Only what is over the £1,000 threshold is taxable, and whether she would have to actually pay any tax on it depends on whether she has other taxable income (like wages from employment) and whether she is or this would take her above the personal allowance threshold.

Before this trading allowance came in people were supposed to register and calculate their actual profit no matter how much or little they received from it.  So this was designed to make life much easier for very small traders, and for HMRC not having to deal with quite so many fairly inconsequential self-assessments.

soolin

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

The issue would be that when EBay declare to HMRC they declare everything over a certain amount , so if your selling got to the 30 items or £1000 takings then it would go against your tax  liability, are you happy with that? 

RFW

rundmc-k said:

I apologise if this has been covered a lot, I have had a good look through the forum and haven't been completely sure as to the answer:

My wife has sold personal possessions on ebay throughout the year just to get rid of stuff in the house- no issue. However an item she sold got quite a good return and she realised that if she bought a few more, she could get a decent return on these items. So therefore she essentially started trading. Her income from that in the last few months is approaching £1k

My question is... if she goes over £1k from those items, is that when she would need to declare it to HMRC?
Also, she gives 10% of the sales of everything she lists to charity, so would you remove that 10% when adding up the income earned?

Thankyou for any advice on this

If you don't want to shell out for an accountant I'd suggest calling HMRC. I can't tell what you mean from "income" is that turnover, or profit? Even so there's not going to be a massive tax liability and HMRC would help you fill out any taxes you need.
A decent accountant could possibly set you up so they ended up paying you money back. It's a different time and a different set up but on my first visit to an accountant he looked at my details, ticked some boxes, told me to sign a form or three and he'd got me overpaid tax back that paid his salary for 2 years!

Langerhan

Spoonie_Turtle said:

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

GadgetGuru said:

rundmc-k said:

Thanks for the responses. I presume if she stopped selling items that could be deemed as trading on her account and used mine instead, that would be theoretically ok to do up to the £1000 threshold as well?

I dont see why not, but you never know with HMRC. They'll screw you no matter what you do. 

No as it would still be income from her trading, the £1,000 applies to all sources of trading income.  If she were self-employed with two businesses she'd include both on a self-assessment, this is no different and if she thought using a different account meant she didn't have to declare anything that would be fraud.

Only what is over the £1,000 threshold is taxable, and whether she would have to actually pay any tax on it depends on whether she has other taxable income (like wages from employment) and whether she is or this would take her above the personal allowance threshold.

Before this trading allowance came in people were supposed to register and calculate their actual profit no matter how much or little they received from it.  So this was designed to make life much easier for very small traders, and for HMRC not having to deal with quite so many fairly inconsequential self-assessments.

Exactly this - the trading allowance isn't "you're allowed to earn £1000 per account", or business sellers would all just set up a new account when they were reaching it. In reply to the question in the original post, yes, if your wife has over £1000 income from trading (because she's been buying things to resell for profit), she's going to need to tell HMRC.

rundmc-k

I  appreciate the responses. I suppose what I was thinking was, if she is theoretically giving me some items that she bought as gifts, and I choose to sell them on my ebay account in my name and receive the income into my bank account, surely that counts as me trading, not her?