HMRC tax on £1000 sales

[Anonymous]

Does the £1000 p.a. sales figure include postage? I sell low value items & the postage is usually higher than the value of the item.  On £1000 sales i'd be lucky to make £200 profit.  Seems the end of Ebay for sellers like me.

[reidscott1]

OK, that will be a little confusing but doable.

Thanks again.

[reidscott1]

So I went to the HMRC website and answered the questions truthfully.

Did you earn more than £1,000 from working for yourself?

No (I've earned less than £1000 from the CDs I bought)

Do you need to pay any Capital Gains Tax?

No (I haven't earned more than £6000 from personal belongings)

And got the answer...

You do not need to send a Self Assessment tax return

So to send in a return would I need to answer one of those questions incorrectly? Or am I being daft?

[*vyolla*]

That's all correct, that's what we've been saying - if you're trading (as a business) and don't make more than £1,000 in sales in that tax year then you don't need to complete a self assessment form. 

[reidscott1]

Thank you again, for both your answers and your patience. It genuinely is very much appreciated.

You've set my mind at rest and opened my eyes to the fact that I need to keep a closer eye on what I'm doing to avoid inadvertantly getting things wrong.

[meleksale]

And It will take them forever to investigate millions of sellers who go over the £1000 Mark...Pure Greed from HMRC.

[jow1995]

With Artificial Intelligence , it will not be difficult to investigate all the "private sellers", Tax bills will be automated , thats when the fun starts. Sellers ignore at your peril!

[turtley_worth_it]

You are free to not declare your trading, or any other income or gains, to the tax authority of the UK if you so wish. That is your right as an individual. HMRC are then well within their legislative rights to collect what they believe, based on evidence and a subsequent balance of probabilities, you actually owe. Plus penalties. Plus interest.

That is not 'greed' as you put it but a method of putting you squarely in line with the rest of the compliant tax paying majority. Many of whom are here. It's fairness to the masses. And the penalty is a message: don't do it again!

If however your reference to greed is that of the tax rates applied to said income, use your vote in the next election. The government of the day set said rates, HMRC are the collection arm, nothing more.

[houseroom1]

That applies to all businesses apart from landlords.

[seanvideoman]

i am guessing from reading your post that you are old enough to have retired  or close to it like myself as i have also been collecting films/cds /etc etc for 40 years albeit i turned it into my business and not just a hobby.

first £12500 approx is tax free/pension counts towards this total so say £10k pension

  leaving you with approx £2500 left before you have to pay tax

just keep a monthly record of your sales over a period from april to march

in your records just use an a4 book and have a column for everything i will list below and use a base of say £400 as an example

sold 40 cds at £10 each

your sales total for month £400

10% sales fee approx from cds   £40

20% vat fee on sales £8

36P item fee this includes vat £14.40

returns and lost post if any £10

postage fees cds cost £96 at £2.40 each

stationary fee -ie envelopes/boxes/parcel tape £10

price you actually paid £5  each cd total £200

total costs £378

add all that up and then subtract it from what sales fee you have and that is your profit/loss for the month

total profit £22

do that every month to the following april and then submit the totals over the 12 months to hmrc

a simple tax return with just this would take 15 min max and you have peace of mind and can keep on selling your own collection.

there are other things you can claim for but with such small sums it is not worth it.

[houseroom1]

Hi
Thank you so much for your message. I am retired but I really am getting old because I don’t remember posting about record keeping. This is something I have been wondering about so maybe I did! Your methodology looks simple and logical. I am going to look at if/how I could use the sellers hub. That should at least give me fees and postage as I always book that through EBay. Thank you again for taking the trouble to write to me and share your experience.

Sent from Outlook for iOS<>

[storme30]

The one most critcal factor in all this is not HMRC ,its the fact that a private company (ebay) will retain your NI/UTR on their records even if you close your account next year,that doesn't sit well for me ..currently only  my accountant knows my NI/UTR ..do you trust a third party with the info ?.What happens if ebay sells up and Elon Musk buys ebay  ..yes that's right he now has your personal records . 

[ett1954]

@storme30   "currently only  my accountant knows my NI/UTR" ..... plus your banks, building societies, employer and previous employers if you have been taxed through PAYE.  Plus as you say your accountant, who is also a third party - all these are 'private' companies.

..do you trust a third party with the info ? ...... They all work to the same data protection laws, as will eBay and all the other digital sales platforms; plus the likes of Uber, Deliveroo and anyone else who falls under this legislation.

[reidscott1]

Thanks for the detailed reply. I'm in my early 50s, so not retired yet unfortunately, so my tax threshold for selling my own items is £6000, which I won't surpass, and for items I've bought with an eye to sell is £1000, which it looks like I might suprass come the end of the tax year.

Thankfully my love of a list means I've kept a full record of what I've sold and have also managed to pull together my outgoings without too many issues thanks to buying it all online, so hopefully self assessing should be reasonably straight forward for someone who hasn't done it before.

Thanks again.

[papso22]

That £6,000 is a capital gains tax threshold, which is a tax per item, not on total 'turnover'.   

[seanvideoman]

self assesment hmrc does run to many pages but 90% of them will be irrelevent to your situation and you will not need to fill them in / its all online now anyway / and as you have figures at hand it really is very simple

all they want is one figure for outgoings and one figure for profit for something like your situation

all your accounts that you hold of your ebay spending  just keep for 6 years you do not need to submit them with your return.

once you have registered i think ebay section of hmrc under self employed earnings would be 2 pages at most from memory and of those pages maybe 8 questions would be relevent.

thats it and that simple and if you get stuck on anything you can ring hmrc and the staff there will guide you through anything you are not sure off/they are all  geordies or glaswegians and very helpful .

you then submit get a huge long reference number and total that is owed-in your case will be tiny ammount if anything

they will then send you a bill for whatever you owe and you have 9 months to pay if you submit it in april

[cornish_girl_1]

Thank you, that's most helpful.  I was dreading the fax return but you gave out my mind at ease.

[reidscott1]

So I can sell as many of my own items as I like as long as none of them indivually raises over £6000?

That isn't the impression I;ve taken from others posts in this thread and others but would be delighted to be corrected. 

Thanks.

[reidscott1]

Thank you for the reassurance, very much apreciated.

[*devils.advocate*]

That isn't the impression I;ve taken from others posts in this thread

It's because there's so much incorrect and misleading information and comment which is so wrong.

The thread should be locked because of this.

The £6000 figure refers to Capital Gains Tax (CGT) which has nothing whatsoever to do with this situation under "discussion".

[arkwebus]

For what it's worth although the sales may be £1000 plus if the profit is £200 odd it is that figure [as identified over a whole tax year] that you put into your self assessment tax return.    [After all expenses such as part of your house as office and so on]

My own feeling is that this is all a bit of a flash in the pan and that while it is possible I cannot see any enforcement/investigation of smaller traders.  

I doubt HMRC are going to take on more, effective staff   @Anonymous