Do I need to submit a self assessment tax return to HMRC?

[bluerockrecords]

Hello. I earn over the £1000 tax free allowance and it would be clear for me to send a tax return if I had a job that would push me over the £12570 tax free allowance limit. However, I do not earn close to the £12570 tax free allowance as I currently only work part time and money earnt on eBay is way under. Do I still need to send a self assessment tax return or will I be notified when I need to send a tax return? Thanks 

[runninginlane4]

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@4_bathrooms wrote:

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@runninginlane4 wrote:

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Yes, the threshold was reduced to £3,000 for this tax year. That £3,000 threshold is on the gain (sale price minus purchase price) and not, as you said, the sale value. 

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From GOV.UK (which hasn't been updated):

"You may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) a personal possession for £6,000 or more."

I'm guessing they forgot to update that page with the General Election and everything.

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You should have highlighted the word 'may' as well. What is on the Government website is correct but in the example you gave CGT would not be payable. In extreme cases it could be possible that the sale price and the capital gain are the same amount (it didn't cost anything) and that is what their wording caters for.

[4_bathrooms]

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@runninginlane4 wrote:

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You should have highlighted the word 'may' as well. What is on the Government website is correct but in the example you gave CGT would not be payable. In extreme cases it could be possible that the sale price and the capital gain are the same amount (it didn't cost anything) and that is what their wording caters for.

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The "may" is due to the CGT allowances. For individuals the allowance is the same as the threshold but for trusts it is half the threshold. For sole traders and ordinary partnerships there is no threshold and no allowance but tax relief might be available (companies don't pay CGT as they would be taxed on the profit made via corporation tax). 

[runninginlane4]

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@4_bathrooms wrote:

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The "may" is due to the CGT allowances. 

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You are wrong. 

So according to your logic if I buy something for £3,000 and sell it for £3,005 I would have to pay CGT on the £5 gain because it sold for more than £3,000, the CGT threshold. Really? ???

There are probably hundreds of websites out there that tell you how CGT is calculated with examples. I suggest you go look at a few and educate yourself.  I've already given you a link to a CGT calulator and if you had bothered to type your example into it you would see no CGT is payable.

[4_bathrooms]

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@runninginlane4 wrote:

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@4_bathrooms wrote:

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The "may" is due to the CGT allowances. 

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You are wrong. 

So according to your logic if I buy something for £3,000 and sell it for £3,005 I would have to pay CGT on the £5 gain because it sold for more than £3,000, the CGT threshold. Really? ???

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Yes, you would if you had exhausted your £3,000 CGT allowance for the tax year. You could (for example) sell one item for £6,000 that you paid £3,000 for and use the allowance against that gain. However, if you sold another item for £3,005 that you paid £3,000 for in the same tax year you would pay CGT on that £5 gain as you had already exhausted your allowance: 

[runninginlane4]

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@4_bathrooms wrote:

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@runninginlane4 wrote:

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@4_bathrooms wrote:

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The "may" is due to the CGT allowances. 

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You are wrong. 

So according to your logic if I buy something for £3,000 and sell it for £3,005 I would have to pay CGT on the £5 gain because it sold for more than £3,000, the CGT threshold. Really? ???

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Yes, you would if you had exhausted your £3,000 CGT allowance for the tax year. You could (for example) sell one item for £6,000 that you paid £3,000 for and use the allowance against that gain. However, if you sold another item for £3,005 that you paid £3,000 for in the same tax year you would pay CGT on that £5 gain as you had already exhausted your allowance: 

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Don't remember you claiming there were two items in your initial example, and didn't claim there were two in my example so why are you now adding a second item? Is it because you've finally realised you've got it wrong and now you are changing the parameters in an attempt to try and prove yourself right. 

[4_bathrooms]

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@runninginlane4 wrote:

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@4_bathrooms wrote:

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The "may" is due to the CGT allowances. 

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You are wrong. 

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You know what - I am wrong.

The threshold (for possessions) is still £6,000; this didn't change for the 2024/2025 tax year. The CGT allowance for individuals is £3,000 (£1,500 for trusts). However, as I was trying to point out the allowance is not a threshold - it is a tax-free allowance that can be used during the tax year similar to the (unrelated) personal allowance for income tax. Just to prove that people should only trust what is written on the GOV.UK website or given by a qualified advisor - rather than strangers on the internet or a non-Government endorsed calculator found via Google - the calculation that was shown in my previous post is also wrong. There would have been no CGT to pay as the possession that sold for £3,005 would not have attracted any CGT liability. That calculator also gets it wrong if only one asset disposed of for less than £6,000 generates over £3,000 in gain:

Something else to consider with the £3,000 allowance is being an allowance you do not have to use it. For example, where possessions that sell for between £6,000 and £15,000 are concerned you can either calculate your gain in the normal way or you can subtract £6,000 (the threshold) from the amount you received and multiply that figure by 5/3rds (1.667):

Purchased for: £2,000

Sold for: £6,001

Normal way:

Gain: £4,0001

Allowance: -£3,000

CGT due on: £1,001

@10%: £100.10 

5/3rds:

£6,001 - £6,000 = £1.00

CGT due on (£1.00 * 1.667) = £1.68

@10%: 17p

A good example of where someone would not want to use their £3,000 CGT allowance (or 17p of it).