I really don't think I've ever come across a private eBay seller who is raking in thousands and thousands.
Nor a hobby seller which comes under miscellaneous income and not necessarily running a business for profit, most never reach £1000 which is a trading allowance , first launched in 2017 by HMRC for what is known as "Micro business sellers" ... and yet many of these are also being targeted by eBay to upgrade to a business seller account and are not, likely wise those who are offloading their personal items which it seems the account holder now needs to prove they are in fact their own items? If in doubt contact HMRC for clarification on whether your " hobby selling" would be considered a business and require registration. If your " hobby selling" is deemed to be a business then any " profits" can be declared under the " self- assessment" tax return.
Also under the new amendments of the Finance Act 2016 HMRC were given access to gather all information from online platforms of sellers, so the new " rules" seem to be to " catch" those who perhaps should be registered " self employed" and are not declaring extra income or those who are on benefits , or perhaps those who run a separate business and are using eBay to sell a number of items " under the radar" so to speak to avoid tax implications.
The Finance Act 2016 gave the organisation powers to collect bulk information from internet companies on self-employed sellers it believes are failing to declare income. HMRC’s new £100m Connect computer system gathers information from government and corporate sources to provide accurate profiles of our personal income.
HMRC can obtain account data from PayPal from smartphone app stores run by Apple and Google, and from holiday comparison websites and a host of other online retailers.
Remember there is the personal tax free allowance currently at £12570 per annum and anything over this could be considered as taxable " extra income" if running as a business for profit. It is my understanding that HMRC will contact by letter to inform the recipient of any extra information HMRC may require to determine your " tax responsibilities" and/or " registration as a business" if needed of not.
A quick check- list :
Even if you’re selling second-hand items or homemade crafts, HMRC will see it as a commercial venture if it can prove you are doing “anything in the nature of trade”, defined by any of the following:
- You intended to make a profit rather than sell items for enjoyment or to raise emergency funds.
- There are a number of similar transactions in a short period of time.
- You cannot prove the goods gave you a “pride of possession” before being sold.
- The online transactions replicate an existing type of business, such as a clothing retailer.
- Items are modified before selling them to achieve a greater profit.
- Items are sold at a fixed price in the same way as a shop or auction house.
- Money was borrowed to buy an item that could only be repaid upon selling the item.
- Assets are sold on quickly after acquisition.
- Items were bought to sell rather than received as a gift or inheritance.
Hope this helps.
