Ebay Tax Question

DiscmanPete

Spoonie_Turtle said:

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.

Thanks for your advice. I agree 'incapacity benefit' is a loose term (sorry). She qualifies for two types - I know one is PIP. I also know neither are means tested.

DiscmanPete

RFW said:

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.

Thanks for taking the time to reply. It's very likely that she'll get to the uk equivalent of 2000 euro and certainly over 30 items. She has knitted some but always for herself or me (husband). The concern for me is that in it's native form the yarn is as new and suddenly being sold in reasonably large quantities.

I will likely contact HMRC for advice just to make sure she doesn't fall foul of the rules.

Thanks again.

DiscmanPete

DullGreyGuy said:

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?

I think you misunderstand. She puts them at a starting price of 99p but end bids are usually in excess of £20 and the aggregate revenue may end up being several thousand bounds (currently around £550 for four weeks selling). This is a question of quantity and total revenue more than anything.

Dazed_and_C0nfused

DiscmanPete said:

DullGreyGuy said:

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?

I think you misunderstand. She puts them at a starting price of 99p but end bids are usually in excess of £20 and the aggregate revenue may end up being several thousand bounds (currently around £550 for four weeks selling). This is a question of quantity and total revenue more than anything.

You do realise that ultimately her responsibility is to notify HMRC is she has a liability.

Even if this was taxable income, which generated a profit, would she be liable to tax?

She probably has an unused Personal Allowance of £11,310.  Unless one of her benefits is a taxable one.

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework/salf210

DullGreyGuy

DiscmanPete said:

DullGreyGuy said:

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?

I think you misunderstand. She puts them at a starting price of 99p but end bids are usually in excess of £20 and the aggregate revenue may end up being several thousand bounds (currently around £550 for four weeks selling). This is a question of quantity and total revenue more than anything.

I realise that, it was a theoretical response to the poster I quoted who said you are a business once you sell 30 items a year irrespective of its £1bn or 30p revenue you've generated and  irrespective of any other considerations. Which is simply wrong. For a start you only need to register with HMRC once your revenue is over £1k even if you are trying to be a business.

There are some grey areas, wife makes things because she enjoys making things, 2-3 times a year she sells stuff because our home can't hold it all, doesn't sell them at a commercial price and almost every year is making a loss were you to consider it a business. 

I sold my secondhand projector a few years ago, got £5k for it, doesn't make it a business. I bought my first car for £500 and sold it for £750 so made a profit but it wasnt a business.

In principle intent is the key point but it's very hard to workout what someone else's intent is so you look at the wider indicators of what the intent is. Yes many businesses take years to make a profit but that is their goal when they are founded. Impulse buying, hording and then selling is not a business but she may think actually she could turn it into a business 

Langerhan

DiscmanPete said:

RFW said:

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.

Thanks for taking the time to reply. It's very likely that she'll get to the uk equivalent of 2000 euro and certainly over 30 items. She has knitted some but always for herself or me (husband). The concern for me is that in it's native form the yarn is as new and suddenly being sold in reasonably large quantities.

I will likely contact HMRC for advice just to make sure she doesn't fall foul of the rules.

Thanks again.

Your wife bought the wool for personal use, she just didn't use it. She is absolutely not running a business and there's no need to contact HMRC. There's a checker at the bottom of this page if the bit about selling personal possessions doesn't cover it: https://www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms

RFW

Langerhan said:

DiscmanPete said:

Thanks for taking the time to reply. It's very likely that she'll get to the uk equivalent of 2000 euro and certainly over 30 items. She has knitted some but always for herself or me (husband). The concern for me is that in it's native form the yarn is as new and suddenly being sold in reasonably large quantities.

I will likely contact HMRC for advice just to make sure she doesn't fall foul of the rules.

Thanks again.

Your wife bought the wool for personal use, she just didn't use it. She is absolutely not running a business and there's no need to contact HMRC. There's a checker at the bottom of this page if the bit about selling personal possessions doesn't cover it: https://www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms

Whilst I agree there doesn't appear to be any reason for registering as a business or declaring here, given that the OP is clearly anxious I can't see the harm in them checking direct.

Langerhan

RFW said:

Langerhan said:

DiscmanPete said:

Thanks for taking the time to reply. It's very likely that she'll get to the uk equivalent of 2000 euro and certainly over 30 items. She has knitted some but always for herself or me (husband). The concern for me is that in it's native form the yarn is as new and suddenly being sold in reasonably large quantities.

I will likely contact HMRC for advice just to make sure she doesn't fall foul of the rules.

Thanks again.

Your wife bought the wool for personal use, she just didn't use it. She is absolutely not running a business and there's no need to contact HMRC. There's a checker at the bottom of this page if the bit about selling personal possessions doesn't cover it: https://www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms

Whilst I agree there doesn't appear to be any reason for registering as a business or declaring here, given that the OP is clearly anxious I can't see the harm in them checking direct.

That's fair! I suppose I just get a bit definitive after hearing so many people complain about spending hours on hold

Oasis1

RFW said:

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.

Assuming this is financial year, right? so 30 items from April - April?

RFW

Oasis1 said:

RFW said:

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.

Assuming this is financial year, right? so 30 items from April - April?

It doesn't actually apply to me so I don't know for definite, someone else may clarify, I was led to believe it was a calendar year. The one thing I'd say that if you aren't a business it's not something you need to worry about, if you are a business then you should be declaring anyway so it's irrelevant.