Offsetting Tax Against Buying Costs

DrDub

I've started buying from liquidation auctions and then re-selling on eBay.  Can I claim the buyer's commission cost and postage from the liquidation auctions against income tax?  I'm struggling to find a correct answer online. Thanks for any replies.

singhini

DrDub said:

I've started buying from liquidation auctions and then re-selling on eBay.  Can I claim the buyer's commission cost and postage from the liquidation auctions against income tax?  I'm struggling to find a correct answer online. Thanks for any replies.

I don't know for sure but i think yes you can.
Where you write "income Tax" -----> i'm assuming this buy/selling is your job and you are self employed. And if you are and those costs are "wholly and exclusively" associated with the buying/selling of those goods, then i think you can.

Hopefully someone will come along and confirm what the situation is.

soolin

I don’t know why you are struggling, HMRC do an excellent guide if you can find it about business expenses.

Basically you need two lots of figures, *all* your income, and that includes postage buyer pays to you, that gives you your gross income. Then a second set of figures for *all* costs, so that includes buying costs, item costs, postage actually paid to send items, packaging , eBay fees etc- basically all expenses incurred in the course of your business.

I'm assuming here you are registered as a sole trader as that’s really the easiest way to trade as a small business. Your online assessment can actually be completed with just the gross income figure and the total expense figure. 

DrDub

singhini said:

DrDub said:

I've started buying from liquidation auctions and then re-selling on eBay.  Can I claim the buyer's commission cost and postage from the liquidation auctions against income tax?  I'm struggling to find a correct answer online. Thanks for any replies.

I don't know for sure but i think yes you can.
Where you write "income Tax" -----> i'm assuming this buy/selling is your job and you are self employed. And if you are and those costs are "wholly and exclusively" associated with the buying/selling of those goods, then i think you can.

Hopefully someone will come along and confirm what the situation is.

Thanks for the reply.  I'm retired from my old career and this is my new "job." Hopefully someone can enlighten me.  I can't seem to post this on the eBay forums as it doesn't fit into their preordained subject headings.

DrDub

soolin said:

I don’t know why you are struggling, HMRC do an excellent guide if you can find it about business expenses.

Basically you need two lots of figures, *all* your income, and that includes postage buyer pays to you, that gives you your gross income. Then a second set of figures for *all* costs, so that includes buying costs, item costs, postage actually paid to send items, packaging , eBay fees etc- basically all expenses incurred in the course of your business.

I'm assuming here you are registered as a sole trader as that’s really the easiest way to trade as a small business. Your online assessment can actually be completed with just the gross income figure and the total expense figure. 

I'm aware of all of the above, my query is: do I claim for all my buying costs?  And, am I offsetting against Income Tax or Capital Gains Tax.  The HMRC website I saw mentions both.  If you have a better HMRC link, could you please share it.  Thanks.

soolin

DrDub said:

soolin said:

I don’t know why you are struggling, HMRC do an excellent guide if you can find it about business expenses.

Basically you need two lots of figures, *all* your income, and that includes postage buyer pays to you, that gives you your gross income. Then a second set of figures for *all* costs, so that includes buying costs, item costs, postage actually paid to send items, packaging , eBay fees etc- basically all expenses incurred in the course of your business.

I'm assuming here you are registered as a sole trader as that’s really the easiest way to trade as a small business. Your online assessment can actually be completed with just the gross income figure and the total expense figure. 

I'm aware of all of the above, my query is: do I claim for all my buying costs?  And, am I offsetting against Income Tax or Capital Gains Tax.  The HMRC website I saw mentions both.  If you have a better HMRC link, could you please share it.  Thanks.

If you are a business then you are concerned with income tax only, and yes all costs associated with your business are allowed. I’ll try and find you a link. 

soolin

Link for you

https://www.gov.uk/expenses-if-youre-self-employed

savergrant

As I understood it when I did mine HMRC asked for total income (turnover) and profit then calculated tax on the profit figure.

I think this is the expenses guide;
https://www.gov.uk/expenses-if-youre-self-employed

soolin

savergrant said:

As I understood it when I did mine HMRC asked for total income (turnover) and profit then calculated tax on the profit figure.

I think this is the expenses guide;
https://www.gov.uk/expenses-if-youre-self-employed

Your liability to income tax depends on your taxable/net profit. That is calculated by taking all allowable business expenses off the gross profit. The self assessment form does that for you if you use a cash basis as a sole trader, all you need is to enter the 2 figures, gross profit and total expenses. 

Spoonie_Turtle

DrDub said:

soolin said:

I don’t know why you are struggling, HMRC do an excellent guide if you can find it about business expenses.

Basically you need two lots of figures, *all* your income, and that includes postage buyer pays to you, that gives you your gross income. Then a second set of figures for *all* costs, so that includes buying costs, item costs, postage actually paid to send items, packaging , eBay fees etc- basically all expenses incurred in the course of your business.

I'm assuming here you are registered as a sole trader as that’s really the easiest way to trade as a small business. Your online assessment can actually be completed with just the gross income figure and the total expense figure. 

I'm aware of all of the above, my query is: do I claim for all my buying costs?  And, am I offsetting against Income Tax or Capital Gains Tax.  The HMRC website I saw mentions both.  If you have a better HMRC link, could you please share it.  Thanks.

Just as extra info as the above replies have covered income tax: Capital Gains Tax is mainly for personal possessions as far as I understand.  It does mention business assets but that's assets not stock, per the link it leads to.  https://www.gov.uk/capital-gains-tax/what-you-pay-it-on

soolin

Spoonie_Turtle said:

DrDub said:

soolin said:

I don’t know why you are struggling, HMRC do an excellent guide if you can find it about business expenses.

Basically you need two lots of figures, *all* your income, and that includes postage buyer pays to you, that gives you your gross income. Then a second set of figures for *all* costs, so that includes buying costs, item costs, postage actually paid to send items, packaging , eBay fees etc- basically all expenses incurred in the course of your business.

I'm assuming here you are registered as a sole trader as that’s really the easiest way to trade as a small business. Your online assessment can actually be completed with just the gross income figure and the total expense figure. 

I'm aware of all of the above, my query is: do I claim for all my buying costs?  And, am I offsetting against Income Tax or Capital Gains Tax.  The HMRC website I saw mentions both.  If you have a better HMRC link, could you please share it.  Thanks.

Just as extra info as the above replies have covered income tax: Capital Gains Tax is mainly for personal possessions as far as I understand.  It does mention business assets but that's assets not stock, per the link it leads to.  https://www.gov.uk/capital-gains-tax/what-you-pay-it-on

Always worth reminding about the difference between Income tax and capital gains tax- which are two entirely different things.

The forums , mainly Vinted ones, are full of confusion with arguments about what is or is not taxable due to the confusion between CGT and IT not helped by a very confusing message that Vinted have sent to some private sellers about a £6000 exemption.