Ebay - Simple delivery - Buyers fee need to be included on a tax return ?

sidneyyoungblood

A bit of advice please.

My neighbour has been told that he needs to submit a self asseement for his ebay sales for the last year , problem is he has been using a Personal account ( now changed to business ) .

I have given him the spreadsheet I use for my accounting but he is not too sure what gross figures to include from when he was using the personal accountant .

Do the Simple delivery charges and the buyers protection fees need to be included in the totals he received then written off as an expense - I am not too sure as they are both costs charged to the buyer by ebay .. when he listed an item ebay added the simple delivery option and the additional costs ..

soolin

Gross income is the amount they received and does not include fees or postage paid direct to eBay which your neighbour neither ‘received’ nor was able to have any access to. Likewise expenses will only be those incurred and will not include postage paid by buyer to eBay. However for the sake of clarity whilst postage costs cannot be claimed for SD items any packaging materials or on costs like parking costs for drop off can be included as an expense on their accounts.

savergrant

Assuming simple delivery is set to 'buyer pays' then ebay will not include postage (nor buyer protection) in the seller totals. I'm not sure what happens if the seller is paying for simple delivery postage. If the item is not simple delivery then ebay will pass any postage money to the seller and the seller will need to include it in income and expenses.

UKTaxHelper

Agreeing on the mechanics, but there is a prior question worth settling first, because it may mean there is nothing to file at all. Being told to submit a self assessment for eBay sales is not the same as owing tax on them. If your neighbour was selling his own used possessions, that is not trading, and selling second hand items for less than he originally paid produces neither trading profit nor a capital gain. Personal chattels are also exempt from capital gains tax where the item sells for 6,000 pounds or less. In that situation there is no taxable income no matter what the platform reported.

Where it does become taxable is if he was buying with the intention of reselling, making items to sell, or otherwise carrying on a business. That is a question about his intention and the pattern of activity, not about which type of eBay account he used. Switching from a personal account to a business account does not by itself make earlier sales taxable, and staying on a personal account does not make trading sales untaxable.

The one practical trap if he does need to file is that the reports platforms send to HMRC under the digital platform reporting rules show gross consideration, which will be a bigger number than the amount he actually banked. His return will then not match HMRC's data, and that mismatch is a common trigger for a letter. Download the eBay payments report showing net funds received, reconcile it to the gross figure, and keep that reconciliation on file. If a query ever comes it takes ten minutes to answer instead of weeks.

Also worth checking before filing anything, if his gross sales for the year were under 1,000 pounds the trading allowance covers it and no return is needed on that account. That is 1,000 pounds of gross sales, not profit, which is the bit people usually get wrong.

soolin

https://forums.moneysavingexpert.com/discussion/comment/82073298#Comment_82073298

https://forums.moneysavingexpert.com/discussion/comment/82075908#Comment_82075908

https://forums.moneysavingexpert.com/discussion/comment/82075908#Comment_82075908

Quotes have gone a bit weird here and I can't get rid of them, sorry!

OP does say that they are now using a business account, which suggests they were a business all along.

from OP

 ( now changed to business )