Ebay balance and tax

[suema_62]

Out of interest.... if you sell something ebay now dont give you the money they initially hang on to it. If this money doesnt go into your bank account theoretically you havent received it. For prolific sellers that may be of interest to HMRC are they able to apply any tax to something you havent received?  If you then use your balance to buy things, you havent received cash, just a suit or glasses 😉  Your account may show a monetary amount for a sale but it isnt 'real' until you get the dosh and could that amount cover selling fees, shops, promos etc. For ebay to retain the funds are they now a bank and subject to controls? This is a bit like ancient trading, have my saucepan, give me a rolling pin. Imagine gamers that in some games can earn in-game currency then trade that out for real money or use it to buy within the game untaxed. What if, God forbid, an ebay seller dies, executors may be oblivious to funds sitting in ebay balance. When the cash went straight into bank accounts no problem Wonder if ebay considered this.

[ile136yz]

When an eBayer Seller sells an item an invoice for payment is sent to the Buyer.

The Buyer pays & the funds go to eBay's Managed Payments for processing.  The Seller can pay for a postage label from the funds.  The rest of the funds may be Held for up to 28 days if the eBayer is a New or Infrequent Seller (eBay's Guidelines explain reasons for funds on hold). If no Hold required the funds will be paid out as scheduled /or requested / or used to buy eBay Seller's items (Private Sellers).

If the Buyer does not pay the invoice issued within e.g. 4 days  -  the Seller asks eBay to record an 'item not paid for' case  -  so the eBay fees will be credited to the Seller. The Seller's invoice total will show no funds received for the item.

If any Tax needs to be paid to HMRC by either a Business or Private Seller there will be a record of the sale & outcome.

Executors of a deceased eBayer will be able to see the Bank Statements & note if funds from eBay have been going in & out over the last 12 months, so they can contact eBay to check or the Bank to see if any eBay payments have been returned to eBay as the Bank Account is closed.

Trading now is the same as Ancient Trading : Buy  -  Pay  -  Receive

In-Games currency earnt that get traded out for real money may be viewed as real earnings that may be taxed, the Government seem to be looking everywhere.

[papso22]

If your ebay earnings are taxable, they are taxable when the buyer pays ebay on your behalf.  At that point it is your money even if it's not been transferred yet.

Barter transactions are also taxable.  

I am not sure why you think ebay should consider a seller's tax due point when implementing any changes.

Don't forget funds are automatically transferred every three months if not already withdrawn. 

[papso22]

Should also have said that if a seller is 'of interest to HMRC' they should probably have a business account in which case the payment system  is different. 

[myriad*seller]

No, your total sales receipts are the figures that eBay send to HMRC in January

If HMRC decide you are a seller of interest (someone selling items they bought/made or grew to sell), they will ask you to complete a tax return. 

Any tax due will be calculated by HMRC

HMRC will know exactly how much you have sold items for on ALL the selling platforms, not just eBay, this includes Vinted and all the other selling sites. 

The money that comes in via sales will be declared to HMRC, if you then fill in a tax return you can offset actual expenses, but the items you buy with your sales receipts are not expenses unless they are for your business. Only business sellers can offset expenses, as private sellers do not have expenses.

[dancewithadingo]

Good Morning Suema

You are using semantics.  It doesn't matter if you have drawn on that money or not.  You have made the sale and the proceeds are there waiting for you to draw on them.  You should declare all earnings, within the specified amounts/requirements.

[myriad*seller]

Interesting article in the papers this morning 

"

Tens of thousands of people who earn too little to pay tax are still receiving hundreds of pounds in fines for failing to file a tax return on time, according to new data seen by the Observer.

More than 83,000 people earning less than the threshold were issued with a £100 penalty by the tax authorities in 2021-22. Only 17,000 of those fines were later cancelled on appeal. By contrast, only 20,000 people earning £100,000 or more were penalised.

Those with low incomes fare even worse when it comes to the £300 fines handed out for filing a year late. Half of all the 61,000 fines were to people who earn too little to pay tax. Some 12,000 were successful on appeal. Only 5,000 people earning more than £100,000 a year were fined.

The figures have been uncovered under the Freedom of Information Act by the Tax Policy Associates (TPA) thinktank. It has raised concerns about the extent to which people who are vulnerable or facing financial hardship are being issued with the penalties for failing to submit a self-assessment tax form on time, which self-employed workers must do. Currently, anyone who earns less than £12,570 does not pay income tax."

So, failing to submit a tax return, EVEN if you don't owe any tax, can end up with sellers being fined 

[*vyolla*]

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@suema_62 wrote:

Out of interest.... if you sell something ebay now dont give you the money they initially hang on to it. If this money doesnt go into your bank account theoretically you havent received it. For prolific sellers that may be of interest to HMRC are they able to apply any tax to something you havent received? 

Yes, I don't know why you'd think that you haven't received a payment. I sell some things on another site and get paid direct to my PayPal account, but still have to declare it on my tax return as income, even if I keep it as a PayPal balance and use it to buy things with.

What if, God forbid, an ebay seller dies, executors may be oblivious to funds sitting in ebay balance. When the cash went straight into bank accounts no problem Wonder if ebay considered this.

They have:

If you don’t use or withdraw your balance, we’ll automatically send your available funds to your bank account on the first Tuesday of every January, April, July, and October.

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[daro2096]

As long as you don't go over your personal tax allowance in any tax year you should be fine. I think it is £12,570 plus £1,000 for side hussle isn't it? I know it is around that. If you are just on benefits(i.e. Univeral Credit) there would not be any tax to pay. If you are in work and you earn under the tax allowance as long as you don't sell enough to take you over you should be okay. 

Disclaimer: I am not a tax expert. This is just my opinion.

[*vyolla*]

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@daro2096 wrote:

As long as you don't go over your personal tax allowance in any tax year you should be fine. I think it is £12,570 plus £1,000 for side hussle isn't it?

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Only if you're trading as a business.

The £1,000 Trading Allowance is for small business sellers.

Anyone on benefits should check with DWP direct and not take advice from anyone else. 

[daro2096]

As I understand according to what the DWP told me as long as you are just having a clearout of personal belongings as a private seller there isn't any problems but if you go over £12,570 anything over that is taxed at 20%.

I will probably have to fill out a tax form for this year as I have sold a lot more than I usually do in any one year. This year for me is unusal.

[suema_62]

Ah missed the payment into bank accounts if not used or transferred, sellers will need to check that happens. Paypal is different it is a type of bank account shame ebay withdrew the function. Isn't there an online selling allowance of £1k for all non businesses before taxable? well until Wednesday...lol.

[myriad*seller]

It's an online trading allowance of £1000 before you need to register  with HMRC for Self Assessment

The £1000 is total gross sales turnover, not profit. 

eBay will report your sales figures to HMRC as soon as you sell either 30 items or over £1000 in gross sales, whichever comes first.

However, you must register as a business on eBay before you sell your first item as a trader, in order to trade legally. 

[papso22]

The reporting limit is about £1,700.