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.

[pillarboxred]

As I understand it, as far as eBay charges and VAT and Duty are concerned, the value of a sale is the total the consumer paid which includes postage and other delivery charges. That £1000 is for personal items you are selling which usually sell for a lot less than you would have paid for them so there is no profit usually. If you buy things to sell here, you are trading and the £200 is taxable. Look at Performance in your MyeBay account. It might shock you how little you  made when all is taken into account.

[papso22]

The £1,000 Is a TRADING allowance, it has nothing to do with selling personal possessions. 

[*vyolla*]

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@pillarboxred wrote:
That £1000 is for personal items you are selling which usually sell for a lot le...

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That's incorrect.

The £1000 is a Trading Allowance, and it's for small/hobby business sellers. They can sell £1000 worth of goods (gross sales, not profit) before having to declare this on a self assessment return.

A private seller selling their own personal items isn't subject to this, it's nothing to do with their tax allowance. See here:

https://www.gov.uk/check-additional-income-tax

[vintagetoys2u]

Got it thanks !

[sagr2519]

Of course figures count, but they don't tell the full story.

Think of two people, both selling a large volume of used books. One loves reading and over the years, bought a lot of books for personal use. Now this person wants to sell them to make space at home. The other buys books in charity shops etc. for the purpose of selling them for a profit. Their Ebay activity may look the same. Maybe you would expect the person in the first example to list everything at once, but the listing tool is time-consuming so someone with a lot to sell and not a lot of time available would list a few at a time. Maybe you would expect the person in the second example to have a lot of cash withdrawals or a lot of transactions in charity shops, but it would be hard to prove that the money was spent on the books. The person in the first example may also be withdrawing a lot of cash, for example for fear of data misuse. Some people are scared that paying for things by card means banks and insurance companies know what they're buying, so use card for healthy food and cash for junk food.

Sometimes it is clear that a person is running an unregistered business, for example if the member is repeatedly buying things on Ebay and immediately selling them further on Ebay for a higher price, where the seller they bought from accepts returns. Do Ebay share purchase data with HMRC?

[scoobydoo900]

You are wrong there you only pay tax on profit not turn over, like Fords build a car they sell the car for 20k but it cost them 5 k to build it the tax would be based on the 15k profit not the turn over, thats why all companies are taxed on prfit not turn over 

Can you imagine having a tunrn over of 100k and profit out of that was 10k 

you will only pay tax on the profit 

I am a account this is my profession 

[*vyolla*]

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@scoobydoo900 wrote:

I am a account this is my profession 

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That's a new one to me.

What sort of account are you?

[ett1954]

@*vyolla*  "What sort of account are you?"

(An) account is a trainee accountant who doesn't yet know the laws and requirements for trading.  Sorry, couldn't resist it. 

[papso22]

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@scoobydoo900 wrote:

You are wrong there you only pay tax on profit not turn over, like Fords build a car they sell the car for 20k but it cost them 5 k to build it the tax would be based on the 15k profit not the turn over, thats why all companies are taxed on prfit not turn over 

Can you imagine having a tunrn over of 100k and profit out of that was 10k 

you will only pay tax on the profit 

I am a account this is my profession 

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I don't know which of my posts you are responding to, but I can guarantee I am not wrong!

I am a member of the CIOT.  

[buymebuymebuyme]

No murky waters at all. It is very simple. What you sell on your business acount is a sale through the business and will be taxed as so.

[1984jo]

This is what I been thinking. I sell a lot of stuff but most of the stuff has been in my loft or what people have given me and yes I will sell way more that 30 items a year and hopefully make over £1,700 but they are mine stuff. But really how are HMRC going to no what I brought for myself and than 6mths+ later decided I going to get rid of to knowing if I brought something 1 week ago and thought yes I will sell that on eBay and see if I can make a profit on it, I no some can be easy to spot has I think I saw someone who was on a private account selling 50 pairs of brought new Nike trainers but behold this it is going to be very hard to prove it. 

[ukhaberdashery]

"That £1000 is for personal items you are selling which usually se....."

If it's personal good like your old clothes, toys or your car etc that is ok and that does not go towards the £1000

As far as I can see £1000 is an allowable side hustle.  As far as I can see you could buy new/old clothes to sell, cut people grass, or build a garden wall as long as you dont go over £1000 in all the things you are doing or platforms you are selling on. You cant do 3 different hustles and get £1000 per hustle. £1000 is the combined.

If you are going to build a wall for someone you get them to buy the bricks / cement in order to keep your money as low as possible so you dont go over the £1000 any time soon.

[ukhaberdashery]

When it comes to HMRC from what I've heard you have to prove "your innocence"... They do not have to proove you guilty. Totally opposite from from a police investigation. They are basically the post office on steroids.

[ukhaberdashery]

After reading your comment the only misinformation I can see is yours.

I do not see what capital gains tax has to do with any of this as people are selling things for an income...So income tax rules apply.

The rules state if you are buying stuff to sell you need to look at the numbers and if the sales go over £1000 you need to submit them.

I don't think anyone is trying to scare anyone just giving their opinions. Ie I have had an accountant for the lat 10 years, file my vat every 3 monts, been fined by HMRC for not registering for vat in time.

My advice would be to a lot of people would be give up now whilst you can. You are most probably making a profit because you are under the radar and getting away with fees that real businesses have to pay. Once you take the implication of being legit a lot of businesses will not work unless you add 20% to 30% on what you are charging (basically income tax will be taken of those profits) and when a business a lot of other business policies come like accepting returns etc. Dont expect free ebay listings if a business either.

[indigo-island]

The other thing you could do if unclear - is ask HMRC. 

Not relating to this issue but in the past I've written/emailed to them, stated what the situation is and just asked.  A few weeks later have received a helpful letter back with the answer.

Give all the details of your personal situation and they'll tell you what you need to do.

Obviously you need to be prepared to act on the answer - regardless of whether it's the answer you wanted or not.

[vinylscot]

@ukhaberdashery  as with so many posts on these threads, you are wrongly conflating the world of HMRC with the world of eBay.

Just because you pay tax to HMRC, it does not follow that eBay will require you to register as a business seller. The flow of information will be one way (as far as currently advised) from eBay to HMRC. HMRC will not advise eBay to put users on to business accounts. eBay has demonstrated repeatedly and consistenly over a number of years that it is unconcerned with businesses using private accounts. Despite their assurances to the contrary, there is nothing to suggest they have any intention of addressing that.

So yes, some will need to pay some income tax, but they'll still operate personal accounts, receiving all the benefits of doing so, without fulfilling the obligations of business sellers.

If the choice is between selling less and deliberately reducing income, and continuing to attempt to maximise sales/income, even if that may involve paying some tax, I suspect that, in reality, few will change their ways.

[ukhaberdashery]

Well if you want to run a real business you should change to a business account and provide the protection that  a business gives to buyers. But yes I guess ebay will just allow "`fake" businesses to sell on a private account which is wrong and to me dishonest of eBay (and will most probably will be the ones HMRS looks at 1st if the values are high). And ebay should have been taken to account on this due to basically letting people get away with unlawful consumer protections.

Have 2 account one for business and one for private. Keep everything separate and open a bank account so you can separate both easily.

[papso22]

EBay will always fall back on its published guidance which clearly tells sellers that are operating as a business that they need to follow all legal regulations and have an eBay business account. 

What is manifestly wrong is that when a clear business seller contacts eBay CS,  the rep tells them they are ok with a private account when all they should do is point them at the policy and tell them it's up to the member to act in accordance with the law.  When they do this they are actively encouraging illegal activiy.  

But I agree they should be more proactive.  A media campaign about how eBay allows business sellers to trade on private accounts and thus deprive customers of their consumer rights, might make then sit up a bit. 

[1984jo]

Yes I think they do have to prove Ur guilt because the law is very straightforward, the person accused someone off something is the one who got to prove it, not the other way around. 

[ett1954]

Whilst the the approach eBay have taken, and continue to take (turning a blind eye) may have worked in eBay's favour until now if a significant number of these 'private' sellers are held to account by HMRC over the next year or so then no doubt certain sections of the media may well run with the story.

I am sure, as now, the story will be half truths and exaggerations however the resultant backlash could have severe P.R. implications for eBay and their management as some of the blame for 'Johnny' losing his home as a consequence of running his 'business' for years on eBay could, justifiably, be laid partly at eBay's door.  eBay falling back on their extensive user agreement as an excuse will not shield them from the media, especially if it became publicised that businesses had been reporting these 'private' businesses for years with little action taken.