HMRC - RESALE AND PRIVATE SALES

[hype-nn]

I'm going to set up to keep accounts on ebay as I've reached a level of sales. My question is , how do i separate and distinguish between an item I've purchased to resell , and something that I've found in my Attic ? I've thought about having 2 ebay accounts   but I hear ebay are sharing info to HMRC , so that would be one figure .

[ett1954]

To satisfy HMRC if required, and to ease completion of your Self Assessment, you should run two accounts.  A private account for your second hand and personal items and a business account for products you have bought for reselling.  Ideally you should also use two separate bank accounts; this will ensure you can keep the two activities apart.

If HMRC then contact you it will be possible to clearly identify one income from the other and make your life easier, and the job of HMRC smoother.  It doesn't matter if HMRC then see only one figure as you will be more easily able to identify that portion which will be non-taxable income.  You will also be able offset your business expenses (within the limits laid down) against your taxable income.

Once you register as a business and for self assessment you will receive regular emails from HMRC giving information and access to useful webinars they run; this will guide you through the process.  Running a business on eBay is not the difficult part, you just need to be informed and organised.  Selling on eBay - well that's a different matter.

[rjwilmsi]

For every sale I make I keep a record in a spreadsheet including item cost (plus date/location purchased, order number if available), sale price, fees, postage cost, date. From that you can do totals per month/tax year of turnover, expenses and profit - you need turnover/gross sales and total expenses/costs for your Self Assessment tax return.

If you keep two tabs in the spreadsheet you can separate business and personal activity. If you prefer to have two separate eBay accounts you could do that, but if both are over the reporting threshold then HMRC will receive information about both from eBay.

[4_bathrooms]

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@hype-nn wrote:

My question is , how do i separate and distinguish between an item I've purchased to resell , and something that I've found in my Attic ? I've thought about having 2 ebay accounts   but I hear ebay are sharing info to HMRC , so that would be one figure .

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It is more about how eBay are reporting the information to HMRC.

Any trading activity should be conducted via a business account; this will also keep you legally compliant with various acts of consumer legislation. Any private sales should be conducted via a separate private selling account. Although both accounts will be reported to HMRC once you pass the threshold on either one (assuming you're a sole trader) the account types will also be reported. If you lump your private sales together with your business sales under one eBay account HMRC might want you to explain the disparity between what you decared on your self-assessment and what eBay told them your total income was.

Keeping the two completely separate is definitely the way to go as @ett1954 pointed out; it will make it much easier for you to demonstrate to HMRC which of your income was trading income and which income wasn't.