The Implications of eBay’s No-Fee Policy for Private Sellers: A Threat to Business Sellers?

[johnsonfamilytrading]

eBay has long been a popular platform for both casual and professional sellers, allowing individuals to turn their clutter into cash and businesses to reach a broader audience. Recently, eBay announced a no-fee policy for private sellers, a move that many view as a strategic effort to attract more casual users to the platform. However, while this may seem like a boon for private sellers, it could have dire consequences for business sellers who still bear the full burden of fees and subscription costs.

The No-Fee Advantage

For private sellers, the elimination of fees represents an exciting opportunity. It lowers the barrier to entry, allowing anyone with a few items to sell to start turning a profit without worrying about upfront costs. This could encourage more people to try selling on eBay, leading to an influx of new listings and potentially more buyers on the platform.

While this sounds positive, the reality is more nuanced.

The Burden on Business Sellers

Business sellers, those who rely on eBay as a significant revenue source, still face the full suite of fees, including listing fees, final value fees, and often, subscription fees for a shop account. These costs can quickly add up, squeezing profit margins and making it challenging for them to compete.

With the no-fee model attracting more casual sellers—many of whom may be pricing their items to move quickly, perhaps even undercutting established business sellers—competition becomes fiercer. Private sellers often lack the overhead that businesses manage, enabling them to offer lower prices without the same pressure to maintain a sustainable profit margin.

The Risk of Price Undercutting

As more private sellers flood the market with no fees, the likelihood of price undercutting increases. For example, if a private seller lists a similar item for a significantly lower price—say, due to a lack of associated costs—business sellers might find themselves compelled to lower their prices to remain competitive. This creates a race to the bottom, ultimately eroding profit margins and threatening the viability of businesses that have invested in inventory, branding, and customer service.

Quality vs. Quantity

Another aspect of this dynamic is quality. Business sellers often invest time and resources into providing excellent customer service, high-quality listings, and reliable shipping. While casual sellers may not always prioritize these elements, buyers may begin to favor the lowest price over service quality. This shift could diminish the overall customer experience on eBay, pushing buyers away from the platform in the long run.

Long-Term Sustainability

The introduction of a no-fee model for private sellers may seem beneficial for boosting engagement and activity on eBay in the short term. However, in the long run, it threatens to create a less sustainable ecosystem for business sellers. If these sellers can no longer make a living from their eBay operations due to increased competition and diminished margins, we could see a significant drop in the quality and variety of products available.

In the worst-case scenario, some business sellers may be forced to leave the platform altogether, which could ultimately drive buyers away as well. The loss of trusted sellers and quality products could tarnish eBay’s reputation, leading to a diminished user base and reduced overall transactions.

[pg_kicks]

Or we can complain, speak to eBay, highlight how they are allowing people to break the law and doing nothing and push for them to change and make the site safer for everyone who buys from it. If nobody complained about everything and just accepted it we would be in a much worse place. You call it wasted but I call it highlighting the failures within eBay, they have already made changes due to people complaining or whining as you put it so they may do more.

[cooky561]

"I also think ebay are encouraging more private sellers with this knowing that if sellers sell more than thirty plus items they will inform HMRC, ebay should make this more clear when offering private sellers a no fees policy."

I find this a bit alarming, I've had an ebay account since 2004, and I'm pretty sure that by selling stuff I don't need anymore, I've reached 30 items, That's not many items for the life of an eBay account, especially if people do things such as selling old phones when they buy a new one, to reduce the cost of the new phone. (I don't do this, but it's an example)

[pg_kicks]

Dont be alarmed, IMHO even if you sold X amount of things from around your house the worst case would be HMRC send you a letter saying we've been informed you have sold 100 items are you correctly registered with us for your tax return, most will just say yes they were unwanted items. Your only real issue is if you have sold hundreds of things every year and then HMRC might ask eBay for the list of items and look into it, no way HMRC have enough staff to look into all the online market places and each account that sell over the limits.

[sml192]

It's 30 items per year (Jan - Dec) not over the life of the account.  

[leon9503]

It's not just about the 30 items as anyone can sell more than that:

Ebay will pass on data to HMRC automatically if you're selling 30 or more items a year OR have total earnings over the equivalent of £1,000, but even though the data is being shared, it doesn't mean that you will owe tax if you're a private seller.

Selling secondhand items online:

These transactions are unlikely to produce a big income.

They therefore won’t push you over the £1,000 annual tax-free trading allowance.

Tax-free allowance: £1,000, or £12,570 if you don’t have a main job.

HMRC has ‘badges of trade’ with which they define the act. Whilst not all badges of trade apply in every situation, triggering a number of them may identify you to tax authorities as a ‘trader’ who should register for Self Assessment and likely pay tax on eBay sales in the UK.

HMRC Badges of Trade:

• Profit-seeking motive: An intention to make a profit through your eBay sales suggests that you are a ‘trader’.
• Number of transactions: If you sell a large quantity of the same thing or type of thing on eBay this may also indicate a trader status.
• Nature of asset: If the asset sold is only useful to the seller as a means to make profit, this indicates trade.
• Similar transactions: If you conduct transactions similar to existing ‘trade’ transactions elsewhere on the platform you may be deemed an eBay trader.
• Asset modification: If you have modified, changed, repaired or improved something to make an asset more profitable or more easily saleable this also indicates trade.
• Sale process: If an eBay transaction is carried out in a similar way to other transactions already defined as ‘trade’ then you may be held accountable as a ‘trader’.
• Source of finance: If you borrow money or otherwise secure funding to buy the things you sell on eBay then this signifies your trader status.
• *Acquisition: Assets acquired by inheritance, or as gifts, etc., are unlikely to be deemed ‘tradeable’ assets.
• *Time between purchase and sale: In typical trade transactions, there is normally little time between the purchase of an asset and its sale on eBay; whereas holding an asset for a long time before its sale on eBay suggests you are a casual seller, and not a taxable trader.

Capital Gains Tax

Capital Gains Tax applies to all personal assets (except cars) sold for more than £6,000, and specifically applies to the ‘gain’ made on the sale. For example, if a painting you originally bought for £3,000 sells on eBay for £7,500, then you have ‘gained’ £4,500 and must include this amount in your annual Capital Gains allowance.

Individual sellers in the UK have a Capital Gains tax-free allowance of £12,300 per year. Using the example above, this means that because the seller’s gain from the painting was only £4,500, it remains tax-free.

However, if our seller was to then sell more assets at a gain, or had sold the original painting for a larger sum, then they may exceed their annual Capital Gains allowance and be required to report and pay Capital Gains tax to HMRC

This is what it says currently on my private account: [EB doesn't know its t**s from its elbows]

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Currently, you've listed or sold 2 items of your 10,000 monthly limit. You can list or sell up to £99,830.00 more to reach your £100,000.00 monthly limit.

[moonspender]

Reported one last week and all their listings have gone when i checked yesterday

[power4laptops]

eBay haven't thought this through. What is to stop anyone doing this? Sell the stock from your business, privately (so no eBay fees), to an individual person for the amount you want to sell your product on eBay for. That individual then sells it on their eBay private seller account for the exact same amount. That individual hasn't made any profit for the items they have sold so they pay zero tax. The only person paying the tax is the business as they would do anyway and eBay have lost all their final value fees.

[sml192]

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@leon9503 wrote:

Ebay will pass on data to HMRC automatically if you're selling 30 or more items a year OR have total earnings over the equivalent of £1,000, but even though the data is being shared, it doesn't mean that you will owe tax if you're a private seller.

The reporting thresholds are 30 items or 2,000 euros (approximately £1,700).  The £1,000 trading allowance for small businesses is completely separate.

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@leon9503 wrote:

Capital Gains Tax

Capital Gains Tax applies to all personal assets (except cars) sold for more than £6,000, and specifically applies to the ‘gain’ made on the sale. For example, if a painting you originally bought for £3,000 sells on eBay for £7,500, then you have ‘gained’ £4,500 and must include this amount in your annual Capital Gains allowance.

Individual sellers in the UK have a Capital Gains tax-free allowance of £12,300 per year. Using the example above, this means that because the seller’s gain from the painting was only £4,500, it remains tax-free.

However, if our seller was to then sell more assets at a gain, or had sold the original painting for a larger sum, then they may exceed their annual Capital Gains allowance and be required to report and pay Capital Gains tax to HMRC 

The Capital Gains Tax allowance is now £3,000, not £6,000 or £12,300.

2022/23  £12,300

2023/24  £6,000

2024/25  £3,000

Capital Gains Tax applies to each individual item over £3,000.  It isn't calculated on a cumulative basis.

[notimpressedatall]

Well, it only gets better! Out of curosity, I have just checked using my private account - as a 'private seller' you have access to this BUSINESS SELLER BOARD.  What else, ebay?

[funkybunnie-direct]

That might be what ebay say. But look closely and it's obvious that they don't. I could name a seller that has over 16000 items listed (99% brand new and lots with multiple copies) and sold over 10,000 item and is still a 'Private' seller haha. That number of listing would cost me around £870 in listing fees alone. Every month! Over £10,000 a year. On top of my £92/month subscription. Some advantage even before they give 'Private' seller no selling fees

[funkybunnie-direct]

Ebay say they will chase these 'Private' sellers, but there doesn't seem to be any signs of that. And no obvious way of reporting them. Why didn't they make the obvious business seller trade legally years ago? Or at least clean up their site before implementing this fess seller fees for 'Private' seller.

Please note I have no problem with a genuine private seller having free seller fees - on the whole they are no competition to a business seller.

[leon9503]

Apologies for the late reply and thanks for the update on the new amounts, at least now the information is available in one place.

Kudos.