I've sold 97 items for £4500 this tax year

[skulkraken]

Hi all,

I'm a private seller. I collect graded Pokemon cards as a hobby, I have collected for around 5 years now. I also have ADHD, a severe spending problem and quite a bit of credit card debt.

I tend to buy items that I like the look of, then, anywhere between 6 months to 5 years later I'll sell them to free up some money to buy more things I like. I do not buy items with the intention of selling to make make money.

Of the 97 items I've sold, about half of them I've made a small profit on and about half of them I've lost money on. The Pokemon card market went really high in 2020/21 and has been falling ever since. Some items I bought for £1000, I'd sell for £300 many years later.

I'm guessing, that of that £4500 in sales, about £500 might be actual profit. It's difficult to say for certain, because I haven't been keeping records. I haven't been keeping records and I never considered this a money making excercise.

Now, to HMRC, 97 sales that are all in the same catergory are going to look like a business. Even though I've barely made any actual profit. Sometimes I'll buy an item for £100 and sell it for £100, 6 months later...

Should I contact HMRC to explain the situation. I'm guessing that I'm going to have to fill out some sort of tax return? Never done one of these before as I've always been employed.

Please don't be mean in the replies.

[1956glyn]

Our dealing generally with HMRC have not been sympathetic.

We declared all income and paid "the appropriate tax assessed by them"

They screwed up and sent us a nice tax bill........they were adamant even though their fault we had to pay it.

[tea_and_tortoises]

HMRC and collecting taxes due was specifically mentioned in the March 2024 budget.

And I will provide HMRC with the resources they need to ensure everyone pays the tax they owe leading to an increase in revenue collected of over £4.5bn across the forecast period.

If HMRC write to me I will be happier if I have figures and evidence to hand.

If the taxman decides you owe them money for one year, they will look at your past trading.  They can go back years.

Keeping a rough record of what you buy and printing out your monthly statements from Ebay should not be a huge chore for a genuine private seller.  If you are selling a big collection of stuff you have had for years it will be harder to prove but you will be able to show that you have relisted items multiple times and they are not new items you have bought to sell.

[1956glyn]

To be honest my view is the tax man quite rightly will initially go after sellers who list hundreds/thousands of items every month and mainly either in the one category or multi listings.

Then in a few years time this may trickle down to much smaller sellers.  

Going by what a lot are saying on the boards they are really struggling to sell anything so this should not be a problem 😞

I shall just continue listing about 10 items a month max......that is if i can be bothered lol

[jow1995]

The  most sensible answer i have read on this subject, well done.

[theelench]

With respect I think that once again you are a business seller who is no doubt all set up to provide your figures to HMRC and has been for however many years you have been trading, under-estimating the difficulties for private sellers who are not and never have been.

As you say "If the taxman decides you owe them money for one year, they will look at your past trading."

The taxman will decide that the private seller has been trading  --  The private seller has no records from past years, so will have no figures at all to counter the allegation.

"Keeping a rough record of what you buy and printing out your monthly statements from ebay should not be a huge chore for a genuine private seller."

In all the years of dealing with HMRC I never came across a situation where HMRC was interested in "rough records", indeed anything apart from exact figures would probably result in in my being given a penalty for not keeping adequate records.

As a private seller I would have to find, then discover how to print out my monthly statements, which I've never once even looked at.  (Oh, and then go and buy the printer.  My last one died when I moved to W10 and I've never bothered to replace it as it got so little use.)

Also from what I've seen from friends and work colleagues, most do not have a printer and do most things on their mobile, including work / pay records and banking, without any records beyond what is on their phone.  Many will have had the same attitude to selling on ebay.

Genuine private sellers are far more likely to have such difficulties than fake ones, many of whom will have been well aware of the dangers they've been running and will have been preparing for this sort of action by HMRC since they started trading.

If you are selling a large collection, particularly going back many years, it won't be "harder to prove", it will in most cases be impossible to prove anything, as no records will have kept as none were required.

And how will it be possible to show that you have re-listed an item "many times"?  Ebay might keep records of your re-lists for years.  But so far as I'm aware how far back a private seller can access those records is very limited and what about the items you sold in times when selling something on ebay was far easier than now, so items sold first-time of listing.  No record of multiple re-lists for them at all. 

[keeptheroof]

You have ABSOLUTELY NO EVIDENCE for the statement "And HMRC is unlikely to look at anything other than the blindingly obvious when it comes to tax owed."

Just the evidence that in the last 30 years, the HMRC has only managed to investigate 25% of all reported tax frauds.  So how many cases do you think they have managed to find themselves? it's all designed to make look as if they are doing something but truth is they don't have the resources to do much at all. So they choose to try and scare people into do their job for them. 

As for what governments are doing - I'm 65 and in my adult life I've not experienced a UK government capable of achieving anything but selling to get pennies in. I'm very confident that, whatever flavor of government we get next, it will be as bad as the last. I can't recall an election where the phrase "Well they can't be as bad as the last lot" has ever been proven right.

[double_o_heaven]

Only a small department has been set up to deal with all these new reports currently.

But once they realise just how much fruit is available if they decided to purchase slightly longer ladders, I can see that department rapidly expanding.  And I am certain that they have no clue how big that orchard actually is, yet.

It's easy pickings - and will be a considerable return on any money invested to gather it.  Unlike larger, complex investigations, no doubt involving lawyers.

[keeptheroof]

Some people really don't have a clue what a mess this country is in. Every section of the public services is in total disarray.

The thought of a new tax department, which in practice - let be generous and say ten people -  is going to monitor 22 million users and 200k business sellers - It's laughable.  

Even the HMRC has stated the tax status has not changed.

[theelench]

Quite right, that's why ebay / amazon etc.  get to 'negotiate' how much they will agree to pay in UK tax without a fight.

I doubt very much that HMRC will be as lenient with a private seller who has done no more than sell 1 of their own possessions a week for a few years.

The letter will arrive saying they've sold over 30 items this year.  We've noticed that you've been selling regularly for years.  All items in the same category.  We suspect trading.  We assess that you owe us £xxx in tax based on ebays records, that they can no longer access.

How many will just pay up when they have no records to contest  the assessment with, no idea of how to file a tax return.  Terrified of getting penalties or fines for getting it wrong if they try and just wanting to end the whole experience.

[double_o_heaven]

I can see rather a large market opportunity to go back into the tax advisory business...  😉

But as you say, most will probably just pay up and not bother seeking (and paying out) for any professional advice.

[bravergrace]

I'm sure it's true that many people will just pay up - and on a personal level, this may well be a sensible move, even if they don't really owe anything.

Over the past 40 years, I've known many people who preferred not to claim state benefits at all, rather than face the stress and hassle of fighting any assessment.  Supplementary Benefit, Income Support, Child Tax Credit, Universal Credit - they've all suffered from a similar fault, namely that if you don't fit neatly into their pigeonhole of having a steady job with a regular income and regular hours, you incur "overpayments" several times a year, and these are clawed back in a way that makes you feel you're being accused of dishonesty.

The same will apply to eBay sales - and if you're on benefits and top-up your income on eBay (from selling personal possessions or from business sales), this may mean an administrative nightmare.  

[brindsey]

"let be generous and say ten people -  is going to monitor 22 million users and 200k business sellers - It's laughable. "

No, no and no.   When HMRC start getting the figures, it's going to be a Pandora's Box with revenue flying out - bank notes everywhere just waiting to be caught in the Exchequers net.  You really think they'll stop at 10 people??  Even they don't realise how much undeclared 'hussle' revenue is out there, but once they get even an inkling you really think they will stop there. Of course they won't they'll outsource as many investigators as it takes, and for certain sure this is going to be a lot more than ten people. Laugh as much as you like, and make the most of it while you can.  Live the dream!!

[theelench]

I've witnessed the results of one of the DWPs over-payments.  Their mistake in calculating the benefit payment when the recipient was doing all the extra hours work they could, trying to get off benefits.  Combined pay + benefits - rent, left them with £100 a month to live on, all of which DWP knew.  A letter arrived informing them of the over-payment and that it would be taken back at £70 per payment.  Result - no heating and very little food in February '23.

But whether on benefits, pension or low income, how many will pay-up once and stop selling anything rather than see their already pitifully small ebay 'income' further reduced by 20% tax and even more of a hassle than it is already?

[keeptheroof]

I too have seen the misery this country puts on its own people, with no party wanting to be seen as wanting to help people on benefits it's only going to get worse. 

As for this Tax thing? it's not going to affect people on low income, even the taxman has said it makes no change to the current tax laws. You are not going to be taxed below the threshold. So if you should have paid tax before when using eBay and didn't you are slightly more likely to get found out. For everyone else, it's not going to make a bit of difference.

[skulkraken]

"It's not going to affect people on low income"

My salary is very close to minimum wage. Anyone earning over £12500 per year will be above the taxable threshold, so that's anyone with a part time.

If I have to pay tax on personal items that I've sold it's very much going to make a world of difference to me.

Honestly, I absolutely hate what this Government has done. I shouldn't have to have panic attacks worrying that HMRC are going to come after me for selling off personal items in order to clear some credit card debt.

[keeptheroof]

Please don't worry about this. even if you hit your tax allowance you can earn £1,000 on top from private sales. By earn that mean profit so if you say on average you might make 10% above all other costs that mean you could have sales of £10,000 in a tax year without any idea of this being a problem.

I'll say again - Even the taxman says this will not change your tax position.

[*vyolla*]

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@keeptheroof wrote:

Please don't worry about this. even if you hit your tax allowance you can earn £1,000 on top from private sales. 

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The £1,000 Trading Allowance is in addition to any other tax allowances but it's not for private sellers, it's for small businesses starting out or hobby sellers (for example those who make things to sell). 

If they make less than £1,000 in total sales for a tax year (that's total sales, not profit) they don't have to complete a self assessment form.

Having said that, if HMRC were to decide that a private seller was actually trading as a business then if they have made less than £1,000 in total sales for that tax year then it wouldn't be relevant, and if they had then they'll need to complete a self assessment form but will be able to offset some expenses.

I would imagine that the hardest to be hit would be anyone in receipt of a means tested benefit, I've no idea how these work but the fact that they're means tested sounds ominous. 

[keeptheroof]

I included the £1,000 allowance because simply if the taxman says you are trading it very much comes into play. If they don't think you are trading they won't be chasing you.  Also once they claim you are a trading person, they can only claim tax owed on profit after costs. 

This is how tax works, and I say again the taxman says your tax position has not changed at after these requests for ebay to send information. I will not be the case that 22 billion people will be liable to pay more tax.

[jckl1957]

The £1000 trading allowance is an annual gross income from trading.  So, you are allowed to sell items up to the value of £1000 as a trader before you have to complete a self-assessment and tell HMRC about your trading income.

It really is not relevant here.

Ebay has to report details of sellers to HMRC if, over the course of the year, they sell more than 30 items or have sales of more than about £1700.

The OP has sales of £4500 which, if HMRC deemed them to be trading , is well above the £1000 amount for gross sales below which HMRC are not interested.