HMRC Taxes - Selling items from my personal collection, however sales are over the £1000 allowance

[funkojason]

Hey everyone,

I've got a question about selling stuff on eBay and taxes. So, I've been selling off some of my collectibles, mostly vinyl records and Funko Pop toys, for a few years now. This year so far, my sales are £3,000 from selling 51 items. In the past couple of years, I sold around 150 items each year, which equalled a total of £8,000 in sales annually.

Thing is, I've never had to deal with filing taxes for these sales because it was just me clearing out some of my collection. But now that eBay's sharing sales info with HMRC, I'm a bit worried. Especially since a lot of the stuff I'm selling, I've had for years, so proving I'm not making a profit might be tricky.

If I didn't need to file a tax return when my sales revenue were £8,000 in 2022 and 2023, then I don't see why I would need to file one this year since my sales are going to be around the same, especially now that everything is automatically reported to the HMRC regardless.

Anyone else in a similar boat or have advice on how to handle this? Appreciate any help!
Thanks!

[daro2096]

Straight from the government website on Universal Credit. The benefit is reduced by 55p for every pound you earn over £404 per month if you receive help with housing rent or £673 if you receive no housing help.(Edit: this is only if you receive disability benefits or have children or a health condition, I should really learn to read better)

If anyone on eBay is selling more than £404 in items per month they should really be registered as self employed and keeping records for tax purposes.

I think most private sellers are not making this much money per month.

[papso22]

If anyone on eBay is selling more than £404 in items per month they should really be registered as self employed and keeping records for tax purposes.

Not if they are simply getting rid of unwanted personal possessions.

[daro2096]

Well I meant if they are buying and selling not just having a clear out.

[theelench]

"Wow, that's pretty terrifying, tbh."

In 30 years of dealing with HMRC I was never asked to carry out a "Compliance Check" by them and I've not heard of this before.

Obviously this particular request has nothing to do with the new reporting rules coming into effect next year as it relates to 21/23 tax years.

But if this is anything like the line HMRC  is likely to take with private sellers, I can see that plenty will fail to pass the check, simply through lack of records.

Where does a Compliance Check fit into the scenario outlined here of nudge letters and completing SA Tax Returns, if at all?

[papso22]

I think the poster must have meant that they were subject to a 'compliance check' by HMRC.  This is the generic wording used when HMRC are checking your tax position, whatever tax it is. 

HMRC don't ask taxpayers to do a compliance check, they ask them for information so that HMRC can do the check. 

[double_o_heaven]

Yep, the key word in the quote being "earn". 

Although that is of course always open to interpretation!

[willy0230_0]

It is a question of fact if you are trading and if so you should notify HMRC by the 5th October following the year of assessment that you have commenced trading. Failure to notify HMRC can invoke interest and penalties on any unpaid duties. You could also be conducting what is called “an adventure in the nature of trade“ meaning you are not earning your living from such trading but you are carrying it on in the same sort of way a trader would and with a view to profits. Under present legislation you wouldnt need to make a return of the income if your gross receipts were less than £1,000 per annum. However it is best to keep records for 5 years after the 31st January following the year of assessment just in case things take off and HMRC have a fantasy that you have been trading for years earlier than you first notufy them re your income. 
If you have no other income then of course you would be able to earn just  over £12k in a year up to the amount of the personal allowance. Mind you if you are in receipt of taxsble benefits this allowance may be partly used for them and receipt of benefits might require you to advise DWPre your activities. 

If you consider that you may have failed to notify your chargeability or made correct tax returns in connection with this type of thing then you should be considering making a disclosure to HMRC. Always free to have a chat if you have a serious irregularity you consider HMRC shoild know about. 

[pokifrag]

Hi, i was wondering if i could pick your brains on a similar situation. I have had a bunch of pokemon cards that I've decided to sell and as I'm buying packs all the time for myself i get a lot of cards i don't want so i want to sell them too. The vast majority at a few pounds. I am already over the threshold and for work i am self employed. If hmrc decided i need to declare my earnings from ebay does that mean i can claim the purchase cost of the packs i buy? So for example if i buy £3000 worth of packs, sell £1000 could i claim the £3000 as expenses? And seeing as im self employed wouldn't that mean i could have the spare £2000 as expenses for my real job? Hope that makes some sort of sense.

Thanks in advance for any help.

[crg_music]

I was on UC for a bit just after covid and as self employed you could earn but every pound of profit knocked 65p off the credit. I was unfortunately on a casual rent with a friend and no kids etc so could only get £315 or so per month so if I made £400 profit I'd only get £55 UC. If you had kids and renting etc you'd get loads more. 

Its actually really hard to make profit and most self employed earn a lot less than people think so people shouldnt be concerned about reporting it to hmrc, any fines will be more than any tax you may need to pay and if they are going to be taxing you you can claim things back as expenses down to provable cost of purchasing stock, computer, packaging, postage, car, home, internet etc so you can bet people need to be claiming that back. Works both ways.

[crg_music]

Seems they might have reduced it to 55p then since 2022 which is not a bad thing. 

[shaunicus75]

If you make less than £6000 profit from your sales, and there is still a problem, maybe you can use Ebays own messaging and information,  if there is still a problem regarding HMRC, then you could argue Ebay's own message and info is false and misleading, this was part of a message ebay sent me earlier this year whith the headline " there is no side hustle tax"

[ett1954]

Both you and eBay are seemingly confused.

eBay are correct in that there is no new tax, although why they should introduce an Americanism term (‘side hustle’) into their comment I don’t know. It is, as far as I am aware, not a recognised term in UK tax terminology.

Both you and eBay are confusing the £6000 with Capital Gains Tax which incidentally was lowered to £3000 in April this year.

Good luck with anyone claiming that they only followed eBay’s advice.  They regularly state they cannot offer tax advice.  This is a business who don’t also appear to be aware that VAT registration is now 90000 and not the 85000 they keep referring to and also seem to have an issue in what constitutes a business seller and secondly identifying them.

Anyone not sure of their tax liabilities should seek professional advice and not rely on what is said or suggested on these boards by members or eBay representatives.

[shaunicus75]

 The side hustle term was all over the media and from people such as the money saving expert earlier this year. If thats the case about the £6000 limit reducing to £3000, then why did ebay send out that message stating that amount. Even on the gov website when people were asking what are the limits, some of the replies on the website gave different answers to different people giving the impression some of the people working for the civil service or HMRC dont know themselves what the rules or allowances are

[papso22]

That's probably because they were referring to different tax years.  I.e the threshold last tax year, which affects tax due at the time of asking, and the threshold in the current tax year, which affects tax due next year.

I doubt HMRC got it wrong, you need to put the questions and answers into context.

[myriad*seller]

Capital gains tax only applies to private sellers if you sell one item (or a collection as a job lot) for more than £3000 per year. Remove the £6000 figure from your mind, the limit is now £3000. 

That is the only tax that private sellers would be liable for.

The rest of this post is for people who buy, make or grow items to sell - who are legally "Business sellers" (regardless of the type of account they have on eBay - it makes no difference to HMRC) 

If you are only selling your own secondhand unwanted items you are not a business seller so the rest of this post does not apply to you. 

Capital Gains Tax (for private sellers)  has nothing to do with Income Tax which is only levied on BUSINESS sales (eg items you bought, grew or made to sell). 

If you earn over £12000 from your job, then all business sales on eBay are taxed in full

If you don't have a job or other income and earn under £12000 then you wont pay tax unless your profits exceed £12000

All business sellers must still complete a tax return to prove you do not owe tax.

HMRC tell you what tax is owed, if any. 

[willy0230_0]

Hi Myriad - where are you getting the £3,000 as the proceeds limit for chattels exemption? Interested to see the legislation as it is still £6,000 unless I have missed a change that has been adopted in legislation.  

Yes the annual exemption for capital gains tax was reduced to £3,000 of a gain - emphasise the word "gain" - being exempt however the £6,000 is a separate limit under which any disposals of chattels are exempt from consideration as long as the sale price does not exceed the magic gfigure of £6,000 - emphasis the word "consideration" and/or "sale price"

[lighting_signs_and_vintage]

Personally I definitely recognise the term 'side hustle', despite its US origins (in fact from experience I'd argue its definitely part of the lexicon anywhere that speaks English) but I have always, always thought it to mean "someone making an intentional profit through trade alongside paid employment(s)", I have never thought of that phrase in connection with someone having a clearout or selloff of old tut. Or selling their own old clothes etc...

So really, any 'side hustle' earning over £1000 a year definitely is taxable, poor language choice indeed.

[vintique*violet]

In a nutshell

• Everyone in the UK can earn a certain amount per year tax free (£12,570 for 2023/24)
• You need to let HMRC know if you exceed this amount (assuming you aren’t on PAYE)
• If you become self-employed or set up a business you need to let HMRC know within 3 months (there’s a £100 fine if you don’t)
• Class 4 National Insurance Contributions (NICs) start at 8% on all income over £12,570 (raised by £3,000 in 2022), for the self employed this falls to just 6%.
• From April 2022, NICs will increase by 1.25 percentage points as part of the new Health and Social Care Tax (This has now been scrapped)
• Capital gains tax of 18% – 24% is payable on items worth more than £6,000, and over and above your £6,000 capital gains allowance
• You can rent a room in your home tax free up to £7,500 per year
• Additional income earned up to £3,000 can be taxed through PAYE
• 2nd jobs will be automatically taxed at 20% (BR tax code)
• There’s a new £1,000 trading allowance and £1,000 property allowanceintroduced in Autumn 2017 and applied retrospectively from 2017/18

moneysaving experts dot com 

Have a read on there and it will explain -

On a side.note - Big businesses and Government are and have " joined " together. 

Hand in hand . scratch your back , scratch mine. 

Think of that with an " open mind" and see the " bigger" picture. 

The very fact that your details are passed to a third party is under GDPR although Government think they are immune to this. ( lawfully they are not) 

They want to " spy" on everyones bank account - not just to "out" so called benefit " frauds" 

This is under the directive of future CBDC, Carbon and Social credit scores. 

A bit like ESG for companies/businesses. 

Everything will be rated and woe those who do not fall into their " category" "narrative" " rules" can not buy or sell, eat or heat, drive a vehicle let alone own one etc. 

Research some, and then some more. knowledge is good, but truth is even better. 

[lighting_signs_and_vintage]

Agree with everything above, I should have said I see a 'side hustle' defined as being someone very much already in FT employment, so undoubtedly earning over £12,570 PA and doing something on the side (example selling wooden carvings they've made for profit) but that isn't another PAYE job, nor a properly registered SA sole-trader thing, nor (as you say) renting a room etc...

[willy0230_0]

Hi vintique*violet this 

• Capital gains tax of 18% – 24% is payable on items worth more than £6,000, and over and above your £6,000 capital gains allowance

should read 

• Capital gains tax of 18% – 24% is payable on items worth more than £6,000, in excess of  your £3,000 annual capital gains exemption allowance

Petty difference I know but just like to keep things right