Government tax changes - How do I prove it doesn't apply?

[jungro55]

It is my understanding that I shouldn't have to pay tax on my ebay sales. Most of the things I sell are my own possessions that I'm clearing out, some of which would be considered collectible items. If I have a collectible that I kept in good condition and am able to sell it in a 'new' condition years later, I don't know if they're going to try to tax me on that. I can't prove that I didn't buy it purely to sell for a profit. 

I'm selling some old train sets that I inherited, so I have no record of the original cost. I'm worried the government are going to try to tax me on the full value of the sale which probably won't be much more than the cost when it was originally purchased.

Does anyone know much about how exactly this works and whether I'm likely to encounter any issues with this?

Thank you.

[papso22]

There are no government tax changes.   There are new international reporting regulations. 

As to how you might prove to HMRC that you are not trading, that's something that only HMRC could tell you.

[jungro55]

Thanks, I know I can ask HMRC, I was just also hoping for some info on other people's knowledge of experience.

[thesmokingrunner · Accepted solution]

There are exceptions - the best advice is to look at HMRC website to see what they are - but if you are selling personal possessions you wwould not be liable for income tax. You could however, depending on the total value of items sold in any given tax year, be liable for Capital Gains Tax (CGT).

The CGT allowance for the current tax year (2023/24) is £6,000 - that is, you can sell up to £6,000-worth of items without being liable for CGT. In the tax year 2024/25 the CGT allowance is being reduced to £3,000. CGT tax is due at 10% of anything over the CGT allowance for basic-rate (20%) tax-payers and 20% for higher-rate tax-payers (the rates are different when selling a second home but they don't apply in the instance).

You really would be far better off looking at HMRC's website and, if necessary, talking to them. I have read an incredible amount of mis-information on these forums regarding tax which may or may not be due on eBay sales and there is an incredible amount of fundamentally incorrect and misleading advice about income tax and capital gains tax.

If you want an accurate answer to your particular situation this forum is really not the place to find it.

[*vyolla*]

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@thesmokingrunner wrote:

There are exceptions - the best advice is to look at HMRC website to see what they are - but if you are selling personal possessions you wwould not be liable for income tax. You could however, depending on the total value of items sold in any given tax year, be liable for Capital Gains Tax (CGT).

The CGT allowance for the current tax year (2023/24) is £6,000 - that is, you can sell up to £6,000-worth of items without being liable for CGT. In the tax year 2024/25 the CGT allowance is being reduced to £3,000. CGT tax is due at 10% of anything over the CGT allowance for basic-rate (20%) tax-payers and 20% for higher-rate tax-payers (the rates are different when selling a second home but they don't apply in the instance).

You really would be far better off looking at HMRC's website and, if necessary, talking to them. I have read an incredible amount of mis-information on these forums regarding tax which may or may not be due on eBay sales and there is an incredible amount of fundamentally incorrect and misleading advice about income tax and capital gains tax.

If you want an accurate answer to your particular situation this forum is really not the place to find it.

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Your information on Capital Gains is incorrect - this is a tax placed on the disposal and profit on single items, not on up to £6k worth.

All explained here on HMRC's website:

https://www.gov.uk/capital-gains-tax#:~:text=Capital%20Gains%20Tax%20is%20a,')%20that's%20increased%....

[4_bathrooms]

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@thesmokingrunner wrote:

You could however, depending on the total value of items sold in any given tax year, be liable for Capital Gains Tax (CGT).

The CGT allowance for the current tax year (2023/24) is £6,000 - that is, you can sell up to £6,000-worth of items without being liable for CGT.

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That isn't correct; CGT would only be liable on multiple items if they were sold as a set to the same person. A seller could sell multiple disparate items over the course of a year totalling £6,001 and would not be liable for CGT.

Also, Capital Gains Tax is charged on the seller's gain. If you bought a Ming vase for £5,000 then sold it for £7,000 your gain would be £2,000 so CGT would not apply. However, if the vase was gifted to you and you sold it for £7,000 then CGT would apply. Also worth pointing out is that CGT does not apply to (mostly mechanical) items with a limited lifespan such as your personal vehicle or watch.

[*vyolla*]

If you're listing your own personal possessions then no tax should be payable, but nobody here can say what HMRC will do when they receive the information passed on to them by eBay in Jan 2025.

There'll be an algorithm and I believe that a 'nudge' letter will be sent out in these cirumstances asking those sellers to confirm that they are private sellers.

That should be sufficient, but who knows if HMRC will require more in some circumstances. 

[jckl1957]

A lot of the items you are selling and have sold are brand new.

You have to ask yourself whether HMRC will consider you are trading and, if they contact you when Ebay tell them how much you have sold in 2024, how you will prove that you were not trading but were simply selling your own, unwanted items.

Have a look at 'badges of trade' on the HMRC website.  These are a useful guide as to whether or not HMRC will look at the items you have sold and decide that you are trading.

[thesmokingrunner]

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@*vyolla* wrote:

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@thesmokingrunner wrote:

There are exceptions - the best advice is to look at HMRC website to see what they are - but if you are selling personal possessions you wwould not be liable for income tax. You could however, depending on the total value of items sold in any given tax year, be liable for Capital Gains Tax (CGT).

The CGT allowance for the current tax year (2023/24) is £6,000 - that is, you can sell up to £6,000-worth of items without being liable for CGT. In the tax year 2024/25 the CGT allowance is being reduced to £3,000. CGT tax is due at 10% of anything over the CGT allowance for basic-rate (20%) tax-payers and 20% for higher-rate tax-payers (the rates are different when selling a second home but they don't apply in the instance).

You really would be far better off looking at HMRC's website and, if necessary, talking to them. I have read an incredible amount of mis-information on these forums regarding tax which may or may not be due on eBay sales and there is an incredible amount of fundamentally incorrect and misleading advice about income tax and capital gains tax.

If you want an accurate answer to your particular situation this forum is really not the place to find it.

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Your information on Capital Gains is incorrect - this is a tax placed on the disposal and profit on single items, not on up to £6k worth.

All explained here on HMRC's website:

https://www.gov.uk/capital-gains-tax#:~:text=Capital%20Gains%20Tax%20is%20a,')%20that's%20increased%....

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By heck I have read some rubbish in my time but this takes the biscuit, it really does.

Tax placed on the disposal and profit on single items? Absolute rubbish. See https://www.gov.uk/capital-gains-tax/work-out-need-to-pay - to work out if CGT is payable one needs to calculate the gain from each asset sold, add together the gains from each asset and deduct any allowable losses. CGT is payable on any gains above the allowance. No mention at all of disposal of single items. Not one.

According to your explanation provided the profit on each and every single asset when sold is less than £6,000 then no CGT is payable. Rot, absolute rot.

@jungro55  This proves perfectly why you shouldn't rely on answers given on this forum. Check with HMRC.

[ett1954]

@jungro55   "If I have a collectible that I kept in good condition and am able to sell it in a 'new' condition years later, I don't know if they're going to try to tax me on that. I can't prove that I didn't buy it purely to sell for a profit. "

One of the citeria HMRC have is 'proof of ownership'.  You would be best googling this or checking HMRC's website.  Alternatively give the HMRC helpline a call.  Nobody on here can give you a definitive answer to your question.

Some of your collectibles listed as "brand new" were only manufactured in the last few years.  If you can satisfy HMRC on those items you should have no trouble with the others.

[*vyolla*]

@thesmokingrunner 

Exactly, CGT is a tax on each asset's profit when sold over £6k (changing soon to £3k).

Taken from HMRC's website:

Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value.

Obviously if somebody has more than one Picasso lying around they'll pay CGT on that too. You keep trundling this out and I don't know why, it's hardly going to be relevant to 99.99% of any eBay seller, let alone the OP who has asked a question here about their selling. 

Why do you think that your reply about CGT is relevant to them, out of curiosity? 

[thesmokingrunner]

@*vyolla* 

The point you seem to be missing is that CGT is payable on the total gain of assets sold during a tax year. Your repeated reference to CGT being due on each asset's profit when sold for over £6,000 is fundamentally incorrect.

As to why I think my reply to the OP is relevant to them, I suggested they go direct to HMRC's website in order to obtain accurate advice due to the amount of fundamentally incorrect and misleading advice on these forums. In writing this reply it seems I'm not wrong.

[*vyolla*]

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@thesmokingrunner wrote:

@*vyolla* 

The point you seem to be missing is that CGT is payable on the total gain of assets sold during a tax year. Your repeated reference to CGT being due on each asset's profit when sold for over £6,000 is fundamentally incorrect.

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It's not though. Capital Gains is a tax payable on the profit somebody may make from selling a top dollar item they own (there are exemptions such as watches, cars, mechanical items that are set out on HMRC's website on the page I linked to).

It's got nothing to do with sales made during the tax year, CGT is a kind of stand alone tax that is payable within 60 days of the sale. 

You don't declare it on a self assessment form, you just pay it within 60 days. 

CGT will rarely apply to an item sold on eBay. 

[insidethe93]

You can get train sets valued. My family had my father's unwanted train sets (after we'd kept some by way of remembrance) valued through an auctioneer & valuer company. If such a firm doesn't have its own specialist, they either know where to go to effectively subcontract or might be able to advise on a suitable firm.

Certain train sets, especially with original packaging or even within unopened packaging, are surprisingly valuable! Even ones that Dad made up from a kit (model and going-around-the-garden size) fetched a lot for charity at auction.

[double_o_heaven]

So many people here not having a clue what they are talking about when it comes to tax.

Vyolla however, is not one of them.

CGT used to be so much simpler when it was declared on tax returns back in the day.  I have no idea why it keeps being mentioned for ebay sellers though - 99.9% of the time it will not apply.

[thesmokingrunner]

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@*vyolla* wrote:

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@thesmokingrunner wrote:

@*vyolla* 

The point you seem to be missing is that CGT is payable on the total gain of assets sold during a tax year. Your repeated reference to CGT being due on each asset's profit when sold for over £6,000 is fundamentally incorrect.

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It's not though. Capital Gains is a tax payable on the profit somebody may make from selling a top dollar item they own (there are exemptions such as watches, cars, mechanical items that are set out on HMRC's website on the page I linked to).

It's got nothing to do with sales made during the tax year, CGT is a kind of stand alone tax that is payable within 60 days of the sale. 

You don't declare it on a self assessment form, you just pay it within 60 days. 

CGT will rarely apply to an item sold on eBay. 

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More misinformation. CGT due on the sale of a property is payable within 60 days; for other gains it is payable in the tax year after the gain was made. From HMRC's website:

You must report by 31 December in the tax year after you made your gain and pay by 31 January. For example, if you made a gain in the 2023 to 2024 tax year, you need to report it by 31 December 2024 and pay by 31 January 2025.

I give up...

[arkwebus]

Do please remember that even though someone might be liable to pay tax as a business it is not based on anything known to eBay [the "sales"] but is based on the profit. 

That means taking off the cost, postage, eBay's fees, accountancy charge and so on. 

I'm pretty sure that HMRC will really only look at the larger sellers to see that they add "something" to their tax return.  Business sellers will have full records?   

In addition and in your case you inherited the items and could [were any really detailed investigation carried out] show the will/probate.

@jungro55 

[*vyolla*]

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@thesmokingrunner wrote:

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I give up...

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Praise be.

We can split hairs forever on information that's not relevant at all to this OP's question.

[geosacha007]

"According to your explanation provided the profit on each and every single asset when sold is less than £6,000 then no CGT is payable. Rot, absolute rot."

You are wrong and should stop pushing disinformation.  If a private seller selling their personal items sells 500 items all  less than £6000 each, then even if the total is over £6000 no capital gains would be due.

[magpiecorner1]

I totally agree!  I would say some 999.9% times it would not apply!

I would add though, that train sets are 'wasting assets' and under CGT rules, would never incur tax, regardless of the sale value or the profit. 

There have been instances of toy train sets and individual items selling for many thousands of pounds.  Regardless of the value, there is no Capital Gains Tax or any other tax to be paid!

There have been examples of cars selling for millions - many millions!  And perfectly acceptable - and legal - to buy a car with absolute intention of selling for a profit - and ne'er a penny in tax due.