Are your taxes in order? eBay now sending sales data to HMRC

[myriad*seller]

From 1st January 2024 eBay will be legally required to give all sales data to HMRC, so business sellers not paying taxes and/or masquerading as private sellers on eBay will soon be a thing of the past

Plus it will be interesting for all the sellers that now have to declare previous years turnover and pay back taxes and penalties...

This isn't the usual "HMRC are clamping down on sellers" line they use to scare people (but never actually do anything), this is a whole new digital computer system and reporting system that eBay are legally obliged to do from now on, to send all sales details for all sellers to HMRC so they can ensure people are paying taxes on their "side hustles".

It will also apply to other self employed roles such as delivery drivers and people who rent out via AirBNB and similar platforms, all their income will be declared to HMRC who will want those figures to match the taxpayers tax return. 

There will be a lot of worried eBay sellers now.... who've been trading illegally for years, with the feedback history to match, and who have pretended to be "private sellers" until now... 

https://www.thisismoney.co.uk/money/bills/article-12640869/Is-taxman-coming-hustle-Airbnb-Ebay-Uber-...

[*knight-rider*]

`The biggest issue I see is that there is no way to differentiate personal and business sales which leaves potential discrepencies in accounts that no one wants to argue with HMRC over i.e. alongside your business, you decide to sell items from a collection that you have owned for 10+ years and should not have to treat as trading income that is taxed.`

There`s a big difference between selling a collection you`ve had for 10 years (which is the key here) and selling something as a business you purchased the day before, at a cash and carry, which is one of the key `badges` that say your trading, the time between purchase and sale!

People who are selling GENUINE items out the loft or collections they`ve had years, have NOTHING to worry about, you are doing nothing wrong.

[foot_prince]

The problem for HMRC if they wish to avoid unfairly penalising sellers is how to differentiate between trading and non-trading when both are occurring simultaneously under one account. One can often be selling part of an evolving collection and selling recently acquired items surplus to requirements. As well as selling unwanted items on behalf of someone else I.e.an elderly parent.

[papso22]

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@foot_prince wrote:

The problem for HMRC if they wish to avoid unfairly penalising sellers is how to differentiate between trading and non-trading when both are occurring simultaneously under one account. One can often be selling part of an evolving collection and selling recently acquired items surplus to requirements. As well as selling unwanted items on behalf of someone else I.e.an elderly parent.

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The answer is two accounts,  one business,  one personal. 

The business account is a requirement for the business activities, it would always have been a bad idea to mix business with pleasure in a single business account, and against the rules to make business sales on a private one.

[*vyolla*]

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@roboelv wrote:

You need to read previous post before jumping to conclusions.   😉

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Enlighten me.

I asked what you're trying to achieve here. 

[555njp]

My father in law only has one eBay business account which he's had for 22 years and occasionally sells non-business items through it. It doesn't happen often though otherwise would be worth him opening a second account for the free listings and promotions.

Also, he only sells stamps, postcards and related mounts, binders, albums so anything else would be a private sale.

I transferred my private account to business in 2012 and immediately opened another private account specifically to differentiate the two and make accounting easier.

I guess the onus of proof if HMRC investigate and try to reconcile total sales on an business account vs a self-assessment (I.e. audit you) may be tricky but like the self assessment it's largely done on trust.
Much more complex if someone's business is trading secondhand household items across a number of accounts though. I suspect that would be nigh on impossible to prove which items were privately owned vs bought to sell?

[simplyessential_uk]

If HMRC are being sent all records of sellers with turnover of £1700 or 30 a year, theyre only really going to be checking the big numbers of those who are obviously making a living on the side as well as a) claiming benefits or b) not completing a self certification and even then if its under £12k (or whatever the personal allowance is ) that only generates a fine for not completing it, So theyll be looking for people who are claiming benefits and using this as a top up instead of getting a job or income over £12k (profit not turnover will have to be £20k ish to put you on their radar) They only have a certain amount of manpower so wont waste it on people they cant get money from 

[555njp]

Totally agree,

I think thresholds for investigating further will be much higher and said something similar on another thread (or possibly higher up in this one lol.).

They may make examples of a few low value accounts though? Not sure I'd want to test it.

I guess we'll have to wait and see. One thing is certain, lots of accounts will disappear from eBay once it takes hold.

[the_book_seekers]

I think that's why HMRC have effectively given themselves a year. The scheme has started this month but reporting will begin next Jan. Shake the tree now and there will be those who correctly register or stop selling. There have been many posts along these lines so far. Nobody really knows what HMRC's plans are and what their systems can cope with. All we do know is the reporting limits. This time next year will be interesting.

[streapalba]

 Get an accountant. Pay tax if it's due.  Doing otherwise isn't worth the hassle.

[1984jo]

I sell a lot on eBay but it all my stuff that I have brought and had for a number of years or been given. Most are used but some are new that I brought they decided sometimes late (and have been in my loft for some time) that I did not want but I not going to make my money back on them. I do not pay tax at the moment as I am a university student but no if u make a Profit on something that sellers have up to £6,000 has it classed as personal gain tax (if that is correct). And for  someone like me who does not work I will not pay income tax only if I go over £12.500 and there is no chance of that happening on eBay, I would love to but no and do not have the time has I have assignments that take up a lot of my time. I do understand that it needs to be looked at because people who are earning thousands a month and not paying tax or declaring it but it seem to me that small fish who make maybe £100-£150 in profit a month or something are not really who HMRC are going to be looking at because they are not going to get any tax out of them, it seem maybe it people who are selling £1,000+ a month that they will be interested in, mayb I am wrong but people who are under £12,000 there really no point looking at them. 

[papso22]

Even if traders make less than the tax threshold on their eBay sales,  it is inevitable that they are also one or more of the following :

1. Trading on other sites as well.

2. Have another job that uses up their tax allowance.

3. Are on benefits.

What you see on eBay is not the full picture and HMRC will know that. 

[kempseykate]

When I had a business on here I was below the tax threshold. 

1. Didn't trade on other sites - well a short fling with Am, where I picked up a few odd sales.

2. Didn't have another job.

3. Wasn't on benefits.

However, I did still fill in a Self Assessment form every year.

[1984jo]

Well I do not work, or claim benefit. I am a student and I get student finance but that is basically a loan. I sell stuff that is mine or that I been give to me as a gift, and I do not make anywhere near £6,000 (personal gain tax) and definitely nowhere near £12,000 income tax but when I went on the government website and filled in form on there, they said that I fine and do not need to anything. 

I think £1,700 is fine but the 30 items is a bit under fair, has u can put 30 items in one go if u buy a massive amount of new clothes and get rid off the Ur old clothes, or have kids or basically have loft fully off stuff like I do. I guess u may think it fine but I think 30 items is a little to low. 

[papso22]

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@kempseykate wrote:

When I had a business on here I was below the tax threshold. 

1. Didn't trade on other sites - well a short fling with Am, where I picked up a few odd sales.

2. Didn't have another job.

3. Wasn't on benefits.

However, I did still fill in a Self Assessment form every year.

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I should have included

4. Have other means of support. 

I know the state pension is currently below the tax threshold but I don't think anyone would choose to survive on that level of income if they could supplement it. 

Not saying you were a pensioner,  just using that as an example. 

[papso22]

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@1984jo wrote:

Well I do not work, or claim benefit. I am a student and I get student finance but that is basically a loan. I sell stuff that is mine or that I been give to me as a gift, and I do not make anywhere near £6,000 (personal gain tax) and definitely nowhere near £12,000 income tax but when I went on the government website and filled in form on there, they said that I fine and do not need to anything. 

I think £1,700 is fine but the 30 items is a bit under fair, has u can put 30 items in one go if u buy a massive amount of new clothes and get rid off the Ur old clothes, or have kids or basically have loft fully off stuff like I do. I guess u may think it fine but I think 30 items is a little to low. 

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Remember the 30 items and £1,700 are just the reporting thresholds, not tax thresholds.  

[555njp]

I think most people will agree that both thresholds are set a bit low, especially the number of items. But it's been said many times on this thread and others; these are only trigger points. HMRC will realise someone selling say 100 personal items in one year with total value of say £2 - £3k, all household items, clothes, etc. mainly secondhand with a few unwanted gifts to boot all on a personal account, is not trading and will take no further action.
IF you are being honest (and I think you are), you are doing nothing wrong and should just continue. Even if HMRC did take an interest in you (highly unlikely), as you say you are not in employment yet so have your £12,570 personal tax allowance before you'd owe them anything anyway. 

[kempseykate]

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@papso22 wrote:

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@kempseykate wrote:

When I had a business on here I was below the tax threshold. 

1. Didn't trade on other sites - well a short fling with Am, where I picked up a few odd sales.

2. Didn't have another job.

3. Wasn't on benefits.

However, I did still fill in a Self Assessment form every year.

---

I should have included

4. Have other means of support. 

I know the state pension is currently below the tax threshold but I don't think anyone would choose to survive on that level of income if they could supplement it. 

Not saying you were a pensioner,  just using that as an example. 

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I wasn't a pensioner - I stopped when I finally got my pension.

The only other means of support was the voluntary redundancy package my OH took, but that had to last a few years.  That and my ebay money kept both of us until my pension started four years ago.  OH will get his pension at the end of the year - so we will feel quite rich then!

[1984jo]

The problem I see is do HMRC have the man power to look at everyone who sold like 100+  items over the year but making less that £1,700 because I got a lot of stuff and yes I have had the stuff for years but still it my own stuff and like I said it been hanging around in my house for some time so I guessing it ok and I will not have to declare anything but still how are they going to look at everyone account or is it a case off saying we will look but if u are not making thousand a month they are just going to skim over and move on to bigger fish. Also how are they going to no if it you own personal let's say trainers to ones u brought to sell on, I guess maybe if u have like 10 brought new Nike or Adidas trainers they it clean that u are buying to sell but otherwise it will be a bit difficult to say

One more point, as it per account I guessing some will just open more accounts and sell 29 items per account, especially if u are doing something illegal. 

[1984jo]

Thank you for your response. No I not employed yet, hopefully after university I can get a job but selling on eBay helps me declutter my loft and my wardrobe, alongside making a little extra Money has trying to life on student finance is very difficult, I may not make the money back on what I spent but I have had items for years so not really expecting to but just wanted to get rid and make a little bit of money back. Honestly it is amazing how many clothes I have in my loft it going to take me some time to get rid. 

[ett1954]

No one is going to manually look through accounts.  HMRC's software algorythms will be set to flag accounts meeting whatever thresholds they are set to.

Opening mutliple accounts will be a red flag to HMRC as each will be traced back to the seller's National Insurance number, which every seller has to shortly provide, this is unique to an individual.   A business seller would be linked via their UTR number.  Several selling accounts by a private seller would immediately raise suspicion and I am sure HMRC will have that workaround covered.  A private seller has no need to open multiple selling accounts ...... if they are indeed a genuine private seller.

eBay will likewise, I am sure, link accounts as they already do; NI numbers will give them an additional way to easily do this.  eBay cannot be seen to facilitate or condone tax evasion, not least for the bad P.R. it could generate, so I would expect them to be onto this possibility and would prevent or at least consolidate such accounts for reporting purposes.