eBay selling - tax+unwanted items+loss

Hektor_159

Hi everyone,

I understand that the topic of eBay sales tax has been discussed here many times, but I couldn't find the answer to my question or I was looking for the wrong keywords.

I apologize if my questions have already been answered.

Can you help me with the following:

Background:

In April 2022, I bought a lot of home/garden items with the intention of selling them for a profit. Long story short, due to some circumstances, I didn't sell them for another 3 years. This year in May, I bought more items to expand my offering and be more attractive to potential buyers when selling multiple items. Unfortunately, it didn't go as smoothly as I thought. I sold some of them for a profit, some at a loss. Overall, I'm about 20% behind. Please don't judge me - not everyone has the soul of a salesman, I am definitely someone with poor salesman skills

My questions:

1. Can items that I bought 3 years ago with the intention of selling for a profit, after 3 years sitting in the attic be treated as unwanted items that I already owned? Is there a law defining "unwanted, already owned item" or is it just common sense?

2. Should the cost of postage be excluded from the totals? I sell items with free delivery - meaning it is included in the sale price

3. How will the tax relief work if I claim a loss? I estimate that my total sales this year, from the lot I bought this year, will be around £2,500, minus the total postage of around £100-150, I paid £3,000 for the items. Depends on how you calculate shipping, but assuming I can't reduce the final amounts:

£2500-3000 = -£500 (loss). Will I get tax relief on all or part of the £500?

If this is important:

*all items were purchased in the UK from UK registered companies - all taxes, VAT have already been paid

*I have all invoices for items purchased in 2022 and 2025
*Total sales for batch 2022: £720
*Total sales for batch 2025: £415

Thanks in advance for any clarification

Kind Regards

Michal

soolin

Hektor_159 said:

Hi everyone,

I understand that the topic of eBay sales tax has been discussed here many times, but I couldn't find the answer to my question or I was looking for the wrong keywords.

I apologize if my questions have already been answered.

Can you help me with the following:

Background:

In April 2022, I bought a lot of home/garden items with the intention of selling them for a profit. Long story short, due to some circumstances, I didn't sell them for another 3 years. This year in May, I bought more items to expand my offering and be more attractive to potential buyers when selling multiple items. Unfortunately, it didn't go as smoothly as I thought. I sold some of them for a profit, some at a loss. Overall, I'm about 20% behind. Please don't judge me - not everyone has the soul of a salesman, I am definitely someone with poor salesman skills

My questions:

1. Can items that I bought 3 years ago with the intention of selling for a profit, after 3 years sitting in the attic be treated as unwanted items that I already owned? Is there a law defining "unwanted, already owned item" or is it just common sense?

2. Should the cost of postage be excluded from the totals? I sell items with free delivery - meaning it is included in the sale price

3. How will the tax relief work if I claim a loss? I estimate that my total sales this year, from the lot I bought this year, will be around £2,500, minus the total postage of around £100-150, I paid £3,000 for the items. Depends on how you calculate shipping, but assuming I can't reduce the final amounts:

£2500-3000 = -£500 (loss). Will I get tax relief on all or part of the £500?

If this is important:

*all items were purchased in the UK from UK registered companies - all taxes, VAT have already been paid

*I have all invoices for items purchased in 2022 and 2025
*Total sales for batch 2022: £720
*Total sales for batch 2025: £415

Thanks in advance for any clarification

Kind Regards

Michal

If you bought to resell then there's no time limitation. I still have stock lurking around that's older than 3 years but forms part of my business.

Taxable profit is based on 'all' income (including anything received) less all costs, so that would be original item cost plus postage, wrapping materials, selling fees etc. The total - gross income less all expenses forms your taxable profit .

You don't just get tax relief on the loss, it can be complicated in that it can be offset against some other income - but you don't just get 'relief' , an accountant might be a good idea if you are unsure.

If your gross income is less than £1000 in nay tax year then you don't even need to declare it. You only need to declare when your gross income starts to exceed £1000 in any tax year, and even then you have the choice of claiming a £1000 trading allowance rather than claim exact expenses. 

Spoonie_Turtle

You bought them to resell, which means you are trading so if you received more than £1,000 gross receipts (including postage and expenses) in a single tax year, you need to report to HMRC. 
[If you initially bought items to sell and then used them yourself instead, that may be a grey area.  But if you didn't use them, then it was just stock that wasn't shifting/you didn't put up for sale at the time.]

Ultimately as I understand it, you have two options:
1. use the £1,000 trading allowance (so total receipts - £1,000 = potentially taxable profit), or
2. use actual expenses (total receipts - actual expenses = potentially taxable profit).

I do not know how the second option works when you bought the items in a previous tax year though.

[Option 1 works great for people whose actual expenses were under £1,000, or if they were about £1k and they deem the convenience worth potentially paying tax on slightly more profit than they actually made.]

DullGreyGuy

Hektor_159 said:

Hi everyone,

I understand that the topic of eBay sales tax has been discussed here many times, but I couldn't find the answer to my question or I was looking for the wrong keywords.

I apologize if my questions have already been answered.

Can you help me with the following:

Background:

In April 2022, I bought a lot of home/garden items with the intention of selling them for a profit. Long story short, due to some circumstances, I didn't sell them for another 3 years. This year in May, I bought more items to expand my offering and be more attractive to potential buyers when selling multiple items. Unfortunately, it didn't go as smoothly as I thought. I sold some of them for a profit, some at a loss. Overall, I'm about 20% behind. Please don't judge me - not everyone has the soul of a salesman, I am definitely someone with poor salesman skills

My questions:

1. Can items that I bought 3 years ago with the intention of selling for a profit, after 3 years sitting in the attic be treated as unwanted items that I already owned? Is there a law defining "unwanted, already owned item" or is it just common sense?

2. Should the cost of postage be excluded from the totals? I sell items with free delivery - meaning it is included in the sale price

3. How will the tax relief work if I claim a loss? I estimate that my total sales this year, from the lot I bought this year, will be around £2,500, minus the total postage of around £100-150, I paid £3,000 for the items. Depends on how you calculate shipping, but assuming I can't reduce the final amounts:

£2500-3000 = -£500 (loss). Will I get tax relief on all or part of the £500?

If this is important:

*all items were purchased in the UK from UK registered companies - all taxes, VAT have already been paid

*I have all invoices for items purchased in 2022 and 2025
*Total sales for batch 2022: £720
*Total sales for batch 2025: £415

Thanks in advance for any clarification

Kind Regards

Michal

Sole traders typically use cash accounting, its the default, so unlike traditional accounting when you buy stock you immediately remove it from your P&L so when you did your 22/23 tax return did you show the loss? You'd normally carry that forward and use it against profits in future years.

soolin said:
Taxable profit is based on 'all' income (including anything received) less all costs, so that would be original item cost plus postage, wrapping materials, selling fees etc. The total - gross income less all expenses forms your taxable profit .

You don't just get tax relief on the loss, it can be complicated in that it can be offset against some other income - but you don't just get 'relief' , an accountant might be a good idea if you are unsure.

All business income, you cannot offset it against other income like from PAYE when using cash accounting. 

You definition of profit is more like traditional accounting as you say you take off the original price of the time and there are complexities where you hold stock which cost you different amounts for the same thing. Most sole traders use cash accounting where money in is revenue and money out is expenses and they dont have to wait to sell their stock to deduct it from their P&L. 

So buy 10 widgets for £1,000 and sell one for £500 in your first year, under traditional accounting you've made £400 profit even if you've not yet been paid whereas under cash accounting you've made a £500 or £1,000 loss depending on if the money comes in before the year end. 

Hektor_159

Thank you for all your answers. I understand that holding items for years has no affect for business until stock is written off because of any reasons, but what if I'm not a business? 

I'm full time employed. I've just seen a , as I know now, (false) potential to buy few things and sell with profit for couple hundreds of £ per year. 

Thanks 
Michal

Spoonie_Turtle

Hektor_159 said:

Thank you for all your answers. I understand that holding items for years has no affect for business until stock is written off because of any reasons, but what if I'm not a business? 

I'm full time employed. I've just seen a , as I know now, (false) potential to buy few things and sell with profit for couple hundreds of £ per year. 

Thanks 
Michal

In terms of what's a business, you are either trading or you're not. 

Buying things to resell is trading, and therefore all of the advice given is applicable to you.

RFW

Take yourself to an accountant as your other income/tax can be a factor too. 20 minutes with an accountant might be very worthwhile from what I can see. You can get good general advice here but you really want someone to look at you overall.

Hoenir

Hektor_159 said:

but what if I'm not a business? 

Trading for profit is a business. Even if it is only a sideline. 

soolin

Hektor_159 said:

Thank you for all your answers. I understand that holding items for years has no affect for business until stock is written off because of any reasons, but what if I'm not a business? 

I'm full time employed. I've just seen a , as I know now, (false) potential to buy few things and sell with profit for couple hundreds of £ per year. 

Thanks 
Michal

You are a business though, a sole trader. I am also a sole trader , I buy to resell and provide ‘business’ accounts via a simple cash basis to HMRC via self assessment each tax year.

Hektor_159

Thanks for all answers. I think I found some additional supporting info I had in my mind:

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20205

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20310

Thanks all
I will  speak with an accountant about details

Kind Regards
Michal