VAT Registration - Sole Trader - UK and EU Taxes

[Anonymous]

Hi All,

I had an interesting chat with eBay customer service as I wanted to duble check regulations around VAT and taxes since I recently registered as sole trader and therefore changed my account to business. eBay customer service is saying:

- eBay will collect the VAT on your sales and will pass it to HMRC.

- As Business seller registered in eBay UK, you need to registered for VAT. It is mandatory for every business sellers to be VAT registered.

Quick info: I am registered in UK and my items to sell are in UK. I sell only fashion items (clothes, shoes, accessories).

What I would like to understand and confirm is really:

1. why eBay pretend me to be VAT registered to sell on eBay if HMRC says I do not need to - if my taxable turnover do not exceeds the threshold of £85,000? Can I use the platform even if I do not want to comply?

2. does eBay collect VAT on my behalf even when I sell outside of UK? What confuses me is the option in the pricing section saying 'VAT (optional)'. As I am not VAT registered I can't collect any VAT I assume...

3. if I want to sell from UK into EU through eBay's international shipping program, can I do that even if I am not VAT registered and does eBay still collect VAT and taxes on my behalf as they would do when I sell in UK?

I can't really find many answers online. So to recap I would like confirmation that from a VAT/TAX POV I am safe in selling into UK and if I can do that as well for EU while not being VAT registered as I will stay below the 85k threshold.

Thanks.

[lux.parfum.shop]

No, I'm not registered. Ebay didn't ask me for anything, not even a tax number... I didn't get Tax Report 2024 either. I'm here to ask and know in advance what I should prepare for if my sales for 2024 reach a turnover of +- 17,000 £.

[game_raid]

It isn't eBay's responsibility to make sure a seller is tax compliant except if that seller is over the VAT threshold but this is totally different than income tax.

What do you mean your sales reach a turnover of £17,000?

You need to seek professional help from an accountant now if I'm honest, most will give you a free initial consultation and they will charge based on the work they need to do.

You will also need a very reason why you haven't registered for self assessment with the HMRC, I am not sure when your business started but I think and maybe and others can confirm you have to register within 3 months from the date you started trading.

[moldosgifts]

Try registering yourself as the business your are then you can add all the info you require,  these option are on not available on a private account .

[lux.parfum.shop]

Thanks for your help. I'll try to figure it out. My account is 11 years old, but only in the last year have my sales increased significantly, I only sell within the UK.

As the turnover has increased, I'm starting to worry.

But I've studied a lot of material and read this entire topic, and so far eBay hasn't asked me for anything.

I think if there was something wrong with my taxes, I would have already received a warning letter.

[lux.parfum.shop]

So it's not known whether I really need this or not, I'm trying to find out so that there are no problems, because if HMRC says I do not need to - if my taxable turnover do not exceeds the threshold of £85,000.

[moldosgifts]

On ebay if your trading as in buying/making good to sell you must be a business account.

This has nothing to do with the taxes you pay .

Your activity is trading

Private accounts are for selling your unwanted things.

I doubt 29 sets of shampoo counts as your own stuff.

[game_raid]

You need to read this link below.

https://www.ebay.co.uk/help/account/regulatory/sales-reporting/uk-digital-sales-reporting?id=5454

They have already started sending the date to the HMRC because they haven't yet contacted you doesn't mean they won't.

I would also get some help from an accountant to see what your liabilities are.

[lux.parfum.shop]

Yes, thank you, I have already read this article. I will continue to learn more information.

As far as I understand, to switch to a business account, I also need to register as a self-employed worker?

[the-layer-laboratory]

As a sole trader, you must:

1. File a Self-Assessment Tax Return – Required if your total self-employment income exceeds £1,000 in a tax year. Deadline: 31st January (online filing).
2. Pay Income Tax – If total profits (after expenses) exceed the £12,570 personal allowance, you owe 20% (basic rate) tax on profits up to £50,270.
3. Pay National Insurance –
   • Class 2 NI (£3.45/week) if profits exceed £12,570.
   • Class 4 NI (9% on profits over £12,570).

[4_bathrooms]

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@lux.parfum.shop wrote:

So it's not known whether I really need this or not, I'm trying to find out so that there are no problems, because if HMRC says I do not need to - if my taxable turnover do not exceeds the threshold of £85,000.

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If you're trading you have to register for self-assessment if your trading income (turnover) is over £1,000. You have until the 5th October in the following tax year from when you started trading to do so. You absolutely do not want to wait for HMRC to tell you that you should have been declaring your income on a self-assessment tax return!

Just to be clear the VAT registration threshold (currently £90,000) is not a business registration threshold. A business with turnover below the VAT registration threshold is still a business with tax liabilities. You really need to obtain advice from an accountant and/or HMRC regarding your tax position; not eBay.

Also, if you're trading you should be doing so from a business account; this has nothing to do with tax but several consumer laws. For example, it is a specific criminal offence for a trader to masquerade as a private seller (consumer) under the Consumer Protection from Unfair Trading Regulations.  

[isaa-shaza]

Does the threshold for VAT ( 80,000) reset every calendar year? Or every tax year?

[rainbowtrax]

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@isaa-shaza wrote:

Does the threshold for VAT ( 80,000) reset every calendar year? Or every tax year?

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Neither, it's calculated on a rolling year so it updates on a daily basis. The threshold is currently £90,000.

[pillarboxred]

I was VAT registered 35 years ago. I reached a point where I couldn't grow without employing people but I hadn't the capital to increase my turnover by a factor of six to pay for everything and end up with what I had before.  On used goods there was no input VAT to reclaim just output tax on sales. A few things were eligible for the antiques special scheme but the documentation required was unreal and mostly not available as I didn't buy from VAT registered antiques dealers. So, I've never been VAT registered for the 25 years I've been on eBay but I've only been scratching a subsistence living. So it goes. I voted for leaving the EU because I hated the VAT system so much but we seem to be stuck with it. 
All I can suggest is list something for sale and see what happens. 

You must register for VAT if your turnover exceeds £85,000 but you can register if it is lower if you wish to. That would allow you to reclaim input VAT on fees and postage and your other business costs, sellotape, electricity, if not on your secondhand stock. I've not done it out of dread of the paperwork but you've got me thinking. I'm not making anything on eBay now, just disposing of things (lost £10 on the item I sold this weekend) so if I can recoup some money that might be a good idea. 

[isaa-shaza]

so basically what I’m thinking of doing is going up to 80k and then going to another account. But I want to know when it resets the 80k. As for uk it’s £85k in a tax year (april to April). Is ebay calendar year ?

[papso22]

VAT registration threshold is  now £90,000.

[papso22]

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@isaa-shaza wrote:

so basically what I’m thinking of doing is going up to 80k and then going to another account. But I want to know when it resets the 80k. As for uk it’s £85k in a tax year (april to April). Is ebay calendar year ?

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That is called disagregation and could be seen as tax evasion.  It would definitely get you into trouble with HMRC. 

It's not 80k, and it's a rolling threshold over the last 12 months.

[therenewalworkshopltd]

I'm not making anything on eBay now, just disposing of things (lost £10 on the item I sold this weekend) so if I can recoup some money that might be a good idea. 

Just because your losing money on something, does not mean that it would be sensible to register for VAT.

Especially if your not able to claim on your purchases.

EG.  You buy something for £10 (no vat).  You sell it on Ebay for £5 (20% vat).

Ignoring every other fee/cost, you then have a bill for HMRC £0.84.

The only time it's worth registering is when the money you are claiming is more than what you are paying!

[isaa-shaza]

When does it reset though. I’m not trying to go VAT registered

[the-layer-laboratory]

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@isaa-shaza wrote:
When does it reset though. I’m not trying to go VAT registered

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It 'resets' with every passing second, since it is calculated on a continual rolling basis. If you have taken more than £90,000 in the past 365 days, you must become VAT registered. You should seek the advice of an accountant for the specifics of VAT rules.

[papso22]

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@isaa-shaza wrote:
When does it reset though. I’m not trying to go VAT registered

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https://www.gov.uk/register-for-vat