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.

[jow1995]

Best bet is contact HMRC for the correct information. 

[skulkraken]

I've just checked on their website.
https://www.tax.service.gov.uk/guidance/check-non-paye-income/start/how-did-you-receive-additional-i...

Q. How did you receive your additional income?
A. Sold goods or services You sold items or charged for services online or face to face.

Q. Did you only sell personal possessions? Personal possessions are physical items that belong to you, such as clothes, furniture or jewellery. Items that you bought with the intention of selling to make a profit are not classed as personal possessions.

A. Yes (none of these items I've bought with the intention of selling later for a profit)

Q. Have you sold a personal possession for £6,000 or more?
A. No

You do not need to tell HMRC about this income
You do not need to pay tax on personal possessions you sold for less than £6,000.

[*vyolla*]

I'd just keep records of expenses (fees, postage etc) for the 23/24 and 24/25 tax years then if HMRC do decide that you've been trading as a business (and to be honest nobody can tell you how they'll view this at this stage, that would be up to HMRC) you'll at least have all of the information to complete a self assessment.

My personal view is that you may fall into a business category in their eyes. 

When you receive a nudge letter from them you can state that you're selling off your own personal collection, but if there's evidence of buying and re-selling (which, from what you're saying, there appears to be) HMRC may view it differently.

[skulkraken]

"if there's evidence of buying and re-selling" Isn't this what everyone does though?

I bought the items and I no longer want them, so I'm selling them. Sometimes at a small profit, sometimes for the same price I paid for it, sometimes at a considerable loss.

I appreciate your answer none-the-less.

[double_o_heaven]

No-one here can say with certainty how HMRC will view your selling - they may accept your explanation, or may use other reasons - the frequency / similarity and quantity of tranactions for one, to say you are trading.

Regardless, if you keep records of everything like Vy says, including post and packaging costs, eBay fees etc - then you might find overall there is no taxable profit and therefore no liability on your behalf to pay more tax, even if you have to submit a tax return.

Everyone's situation is different and open to interpretation.  It's going to be a fun year if you work for HMRC 😄

[jckl1957]

By law, because your sales have passed the threshold of about £1700, in January 2025, Ebay will pass your details to HMRC.  (Name, address, sales, bank account details, NI number etc.)

HMRC will decide whether or not they want to look more closely at you.  They will be inundated with information from Ebay and other sources in January 2025 so they will have to establish some criteria for contacting sellers.

If they take an interest in your sales and send you a letter, you will have the opportunity to say that you are only selling your own personal items and are not liable to pay any tax.

It is worth pointing out that HMRC have always been able to access details of sellers and sales on Ebay and there have been regular posts in here from sellers who have been contacted by HMRC and asked to complete a self-assessment form.

If HMRC ask for further details regarding your sales, they will look for 'Badges of Trade'.

It is worth googling 'badges of trade' to see whether you think that HMRC will judge that you are trading.

'The ‘badges of trade’ tests, are used by HMRC to help determine whether an activity is a trading activity (business). Careful consideration needs to be given when deciding if a hobby has become a taxable activity. If that happens, your trading activities will be subject to Income Tax and National Insurance.'

[edwardian-dreams]

So if you sell more than 30 items or over 1700 quid or so you get reported to hmrc? 
will they do it by user id or name and address?

cos you could have two ids and split the 30 sale limit /£ limit between the two?

Personally im not worried but I'd rather do without having questions asked about flogging my old clothes or my old China got better thngs to do 

[keeptheroof]

No, you shouldn't, no one should ever contact the taxman unless the taxman owes them money. You are not liable to pay tax on your eBay sales, not now not ever. Please relax and enjoy your hobbies while trying to control your outgoings. Even if you met all the criteria you would only pay tax on PROFITS after the first £1,000 PROFIT in each tax year. 

[papso22]

---

@edwardian-dreams wrote:

So if you sell more than 30 items or over 1700 quid or so you get reported to hmrc? 
will they do it by user id or name and address?

cos you could have two ids and split the 30 sale limit /£ limit between the two?

Personally im not worried but I'd rather do without having questions asked about flogging my old clothes or my old China got better thngs to do 

---

They will use the national insurance number or UTR associated with the account.  They will amalgamate account data. 

[jckl1957]

You don't get reported to HMRC.

Ebay are legally obliged to pass on the sales data of sellers who sell more than 30 items or pass the threshold.

If you had several different IDs because you felt you would be liable to pay tax, that would be tax evasion which is criminal conduct.

[1956glyn]

Hi

You said "a severe spending problem and quite a bit of credit card debt"

May i make a polite and constructive suggestion......cut up those credit cards until you have made extra cash by selling and got the balances down.   Its easy to get into the spiral of using cards too much 😞

[theelench]

I agree with everything you wrote but I think there is more to add.

The biggest "expense" in the equation is often the original cost of the item.

And (from the Badges Of Trade) when the seller bought the item is important, whether they bought it a week or two ago or five years ago.  Rapid buying and selling can indicate trading,  ownership for years can be used to show that there was no intention to trade?

Yes, they need to keep records of the expenses related to the sale but in themselves they are not a defence against HMRC unless the seller can show when they bought the item and what they paid for it?

That is one of the biggest fears of many in this position.  They have no proof of either if they have collected , or just bought stuff,  even five years ago.  The situation only gets worse if they've been collecting or just hoarding for many years.

[insidethe93]

"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."

Sounds like you are buying to sell. Let's hope HMRC doesn't read this thread.

6 months to 5 years isn't long as far as HMRC is concerned. I've posted elsewhere about my 'non compos mentis' father being chased DECADES later for a tax payment which HMRC unofficially conceded he had probably paid. So I'd echo posters who've advised that you keep your transaction records - every transaction no matter how seemingly trivial - and also keep your records in a format that can't break down or become inaccessible.

[millcottage]

Relax - HMRC are not interested in you. As a previous post has stated you pass the test on HMRC web pages as not being liable for taxation.

The folks HMRC are after is people like Jonny;

Jonny buys 10,000 T Shirts from China for £3 each.

Jonny adds a logo onto each at a cost of £2 each.

Jonny sells same T Shirts on eBay for £15 each plus postage.

Jonny makes £10 profit * 10,000 sold in a year and now has £100,000 in the bank.

Jonny does not see need to tell HMRC anything about his income and buys a Porsche for £100k 👍

Jonnys twin brother Freddy works 9 to 5 and weekends and earns £35,000 a year. He gets stopped PAYE taxation on his monthly pay unlike his brother Jonny who earns £100,000 tax free 😀

[kempseykate]

I have just sold an item for £9.50 inc P&P (£3) - so £6.50 (less fees) for me.

Item was bought by my OH some years back, and still had the price sticker on - £14.99.

Do I have the original receipt? - no, because it was bought for his collection, not to resell. How I prove this to HMRC, I have no idea.

My OH is just about to list an annual from the 60s - original price possibly 7/6? 

Do we have the receipt? - no, because it was bought in a time way before ebay existed when he was a kid. 
It has his name in, and a dedication from his aunt and uncle. I can show HMRC a picture of said aunt and uncle, but will this be proof enough for them?

The other day I sold a batch of our CDs* - mostly bought from new, some with reciepts still in, an odd few bought at boot sales years ago. I think I got just under 50p a CD - I dread to think how much we paid for these.  Again, how do I prove to HMRC that these were our own items, not items bought to sell?

*I also sent an even bigger batch to the charity shop.

I know I am selling my own items, HMRC may deside I am buying to sell. Can I prove they are my items, not bought to sell on? No. So to all those saying you need to keep records of all your transactions - how can I when the items were bought/gifted years ago, and mostly we have no proof of how much they were bought for?

If I sell an item for £20, it could have been something I bought years ago for £50; something bought years ago (pre ebay) for £4; or something I bought at a boot sale yesterday for 50p, knowing I could sell it for £20. I know that I am selling my own items, but HMRC (and some posters on here) will just assume whatever they want to assume.

[jow1995]

Looking at your 4.4k of sales and 80 followers it maybe worth getting clarification from HMRC to where you stand going forward.  Must admit that is certainly a high number of personal items. My wife can spend well but even she would probably struggle buying 5k items she no longer needed. This is the grey area between private and buisness sellers.

[theelench]

Of course they will and as HMRC is run as a business in that it has put money into this project, it will want / must show returns on that investment.

Two things I've learnt over the years.

Taxes tend to start with a "Thin end of the wedge" approach.

HMRC have Tunnel Vision when they've decided that they should have been paid more than they got.  They will keep on raising the bar of what they will accept as proof, ignoring whatever the offending tax-payer presents.

Personally I don't think this (re. ebay sellers) will be the rich vein of evaded tax that HMRC might think.

Yes, they will catch a lot of non-tax paying businesses in the first year, the easy targets might have been in their sights behind the scenes for a while.  But by year two the easy targets will have been caught or disappeared from ebay.

Then the scope is likely to be widened, the burden of proof of non-trading less easy to meet in an effort to keep the revenue flowing  To me that means that a lot of sellers who cannot prove that they were selling their personal possessions beyond any acceptable level of reasonable doubt will be assumed to owe tax.  

[kempseykate]

I was waiting for you to pop up. I don't need clarification, thank you. This is our own stuff - no grey area here at all for me. I would think we have bought 5k of books alone in our lifetimes! Maybe you keep your wife on too tight a rein?

I have been on here for 24 years - so that's approx 3½ items a week! It isn't just me - the rest of the family have all had various collections over the last 70 years!

[millcottage]

HMRC take the path of least resistance.

Company wants to avoid paying tax in uk and sets up head office in Luxembourg.

They engage Deloitte or such  (manned by ex HMRC tax consultants now earning better money).

Deloitte or such via HMRC know what company has to do to remain compliant to not pay tax on the uk.

Deloitte or such do a soft audit for tax compliance.

Report sent to HMRC and company X not bothered by HMRC for several years.

HMRC are going to be so overwhelmed by data coming from eBay sellers who feel need to tell them about sales and don't need to 😆