Ebay Tax Question

DiscmanPete

My wife had been hoarding yarn (wool for knitting) for the past few years.  It was mostly bought from shops in packs of several balls to knit e.g. a sweater. She bought far more than she ever needed as it was retail therapy to help with stress e.g. she'd go to a wool fair with friends and buy with the intention of knitting it but never got round to it.
Now she's de-stashing through EBay,  selling around 6 packs per week for around £150 in total. As a result she will soon hit the 30 item / £1,000 limit.  She isn't trying to make a profit.  Some of the yarn is discontinued and she's aware that it will go for more than she paid but a lot won't. Generally she has no official record of what she paid or when. My question is should she be concerned about selling and HMRC taking notice? this doesn't feel clear cut from what I've read but she definitely isn't trading and rarely buys yarn now. 

lincroft1710

Usually items bought for personal use and subsequently sold when no longer required are not subject to tax 

dinosaur66

but as far as i am aware she will still have to register and declare a hmrc tax return once she goes over her 30 items or £1000 total

just go to your account on ebay

go to orders and check back her sales to may 6th 2024 and total them and write it all down in a book for her record keeping .

i do not know how much wool costs but i am guessing she will most probably have paid more than she is selling it for.

in which case when she puts in the figures she will have made a loss for the year and that is perfectly fine and acceptable from someone selling off the own possessions on ebay

as she will not be a business she will not need receipts and as far as i am aware this money will not be taken into account for losing any benefits if she is on any especially as she will have lost money and is just decluttering.

tax return will take 15 min once registered and easily do it yourselfs , you will not need an accountant.

dinosaur66

meant to type april 6th and watching mark carney with rory and alister mention may and typed in what i was watching .

noitsnotme

dinosaur66 said:

but as far as i am aware she will still have to register and declare a hmrc tax return once she goes over her 30 items or £1000 total

No she won’t because she’s not running a business (trading).

If it’s truly 100% selling old personal items, there is no need to declare to HMRC.

soolin

dinosaur66 said:

but as far as i am aware she will still have to register and declare a hmrc tax return once she goes over her 30 items or £1000 total

just go to your account on ebay

go to orders and check back her sales to may 6th 2024 and total them and write it all down in a book for her record keeping .

i do not know how much wool costs but i am guessing she will most probably have paid more than she is selling it for.

in which case when she puts in the figures she will have made a loss for the year and that is perfectly fine and acceptable from someone selling off the own possessions on ebay

as she will not be a business she will not need receipts and as far as i am aware this money will not be taken into account for losing any benefits if she is on any especially as she will have lost money and is just decluttering.

tax return will take 15 min once registered and easily do it yourselfs , you will not need an accountant.

No, personal sellers selling their own unwanted items have never had to declare as a business, and there are no new rules at all. This has been covered everywhere, ebay and Vinted as well as MSE put out explanations as so many people thought there were new tax rules.

Also if as you say a person is not a business, why would they need to prepare accounts for income tax purposes? They don't even need to tell HMRC.

The only new requirement is for all online sites to declare all income over a set amount for anyone using their site- this info together with the NI number will be kept by HMRC. Business sellers will still pay their taxes as normal, personal sellers have no further responsibility- unless HMRC decide to query the selling practice. It is likely that in future years some people who are buying to resell may well get the 'do you want to reconsider your tax return' notice from HMRC.

DiscmanPete

Thanks for all your responses. There are a couple of things I'd like to add...

All items are listed starting at 99p and selling for whatever the top bid is. I don't see how this constitutes intending to make a profit but invite your comments.

The concern about her having to complete a tax return is that she gets incapacity benefit and this could be affected if she is suddenly deemed to be running a business. Does filing a tax return mean this ?

Hoenir

DiscmanPete said:

All items are listed starting at 99p and selling for whatever the top bid is. I don't see how this constitutes intending to make a profit but invite your comments.

Based on you opening post each sale is around £25 in value.  99p has no relevance. The wool obviously has value. 

Spoonie_Turtle

DiscmanPete said:

The concern about her having to complete a tax return is that she gets incapacity benefit and this could be affected if she is suddenly deemed to be running a business. Does filing a tax return mean this ?

She's selling unused, unwanted personal items.  No need to do any tax return or register as self-employed or anything.

Depending on which exact benefit she's claiming (Incapacity Benefit ceased many years ago) the money she's getting from selling may count towards capital (savings) if she's claiming a means-tested benefit.  If so then the threshold to let them know is £6,000 in savings between you - but as I said, it depends on what exactly she's claiming as to whether it's at all relevant.

DullGreyGuy

dinosaur66 said:

but as far as i am aware she will still have to register and declare a hmrc tax return once she goes over her 30 items or £1000 total

Why? 

You need to do a self assessment if you are intending to sell for a profit and your total revenue is over £1,000. 

Why would you think someone selling 30 items for 1p each would require them to register to do self assessment?

RFW

DiscmanPete said:

Thanks for all your responses. There are a couple of things I'd like to add...

All items are listed starting at 99p and selling for whatever the top bid is. I don't see how this constitutes intending to make a profit but invite your comments.

The concern about her having to complete a tax return is that she gets incapacity benefit and this could be affected if she is suddenly deemed to be running a business. Does filing a tax return mean this ?

Making a profit, or intending to, is irrelevant to whether you are a business or not. It took Amazon ten years to start making a profit but I don't think anyone would have classed them as a private seller.

The rules are relatively simple, if you buy or make to resell then you are a business.

To clarify the bits about tax reporting, there are some new rules that mean that Ebay send details of sellers who sell over 30 items or the equivalent of 2000Euros in a year.

The £1000 is for businesses. Once you hit £1000 turnover then you should start declaring to HMRC.

What you need to clarify is whether your wife purchased the yarn to make clothes she intended to sell. That would make her a business. From your description it sounds like it's just been lying around for a while so it's more likely to have never been a business.

If you want to clarify whether it would be considered a business, you can contact HMRC. You may wait a few days(!) on the phone but they do answer eventually.