Inland revenue may spell the end for eBay hobbyists

[abowan2012]

Am I alone in thinking the taxman's interest in clobbering hobbyist sellers could spell the end for eBay hobbyists like myself?

I buy and sell as a hobby but have taken fright at the Inland Revenue's reported decision to go after very minor players. 

I like buying old and interesting things as a way of sorting out friends and family with unusual gifts for birthdays, weddings, Christmas etc.

My hobby has got a little out of hand hand and I've been selling the excess - sometimes at a profit, sometimes at break-even and occasionally at a loss. 

I spend a lot of time doing research and enjoy writing about the items I acquire. I also enjoy the sociable aspect of the hobby when people delight in my finds as much as I do.

All of that is going to go with the spectre of the taxman now threatening to spoil my enjoyment.

The last thing I want to do is filing accounts. I am pretty sure my overheads - running a car, going to view, going to collect, going to drop-off, paying for stationery, breakages etc - will make the taxman's possible interest in me very unrewarding financially.  But the thought of having to log everything down will kill all the fun of it.

I suspect I am not the only one in the same boat and I fear the saleroom auctions will soon feel the pinch - and go out of business - as hobbyists like me drop out of the market.

The problem is, the taxman likes to go after minor players rather than taking what the country's finances are due from the Usual Suspects like Amazon and their ilk.

[jolly-chef]

I think to be on the safe side, anyone who sells on eBay should file a self-assessment in December this year 😁

In reality, I think when Labour get in they'll increase the silly trading to a sensible level like £2,500 and make everyone's lives a little easier

In summary, it's all due to the Tories

[floral.lines.supplies]

It is easy.

If you're selling your dust covered tat from under your bed a few times a year and you make £1000 and under then your a private seller with nowt to worry about.

If you're buying to sell like the OP and going over the £1000 allowance per year than you should be filling in your self assessment and keeping all your paperwork/books as evidence.....and they know they should be.

Just like anyone who is selling large numbers of items and going well over the £1000 pretending to be private sellers on every online site going.

Carboots are going to be rammed this year.

[litp*records]

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@nigel_paul_wright7557 wrote:

You could say "own items" about anything to get around the tax man but if your buying to sell on then you are trading and should have been using a accountant to do your tax return for that.

All that has happened is now the tax man will know how much your turnover is and he will be visiting you.

I have an accountant yet lost £500 last year.

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You don't need an accountant. If you're running a small ebay business and especially if you are self-employed it's easy to do self-assessment tax return yourself.  I have got so quick at doing them now, because the answer to the vast majority of questions is "No"!  

[susapric-68]

Depends what you call a hobby, you have sold over 1k in just 1 month, could say footballers should not be taxed as it's just a hobby and a bit of fun

[litp*records]

Nothing wrong with private sellers selling a grand worth of stuff in a month.  That's easy if you're clearing out your loft etc.  

If you were however doing that consistently over many months/years, and/or there is evidence you are buying to resell, or selling lots of new goods, those are all "badges of trading"

[abowan2012]

You have just wasted my time reading your reply about time-wasting. 

It would be better and helpful to spend your time cross-referencing threads on this subject rather than pompously try and stifle debate.

[lab-rat-57]

Hi

I felt exactly the same as you and after speaking to HMRC, or whatever any clever *bleep* wants to call them, and they really didn't have a clue. Therefore I spoke directly to a very knowledgeable guy in eBay customer services and, rest assured,  eBay are extremely concerned about this. It's already impacted U.S. sellers (long story) and eBay are trying to reverse the U.S. situation and stop the same thing happening in the U.K.

If you are a long term private seller then any changes will not alter what you do this year, 2024.

Best get selling, huh?

[*vyolla*]

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@lab-rat-57 wrote:

Therefore I spoke directly to a very knowledgeable guy in eBay customer services and, rest assured,  eBay are extremely concerned about this. It's already impacted U.S. sellers (long story) and eBay are trying to reverse the U.S. situation and stop the same thing happening in the U.K.

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No idea who you spoke with, but eBay can't reverse this, it's not an eBay decision. This is way out of their juristiction.

It's UK digital reporting legislation set by HMRC:

https://www.legislation.gov.uk/uksi/2023/817/contents/made

More information on what eBay will be reporting and when can be found on their guidance page here:

https://www.ebay.co.uk/help/account/regulatory/uk-digital-sales-reporting?id=5454&st=3&pos=1&query=U...

[thesmokingrunner]

So eBay's tax advice trumps HMRC's tax advice?

Wow. I never knew that...

[ett1954]

@lab-rat-57   "If you are a long term private seller then any changes will not alter what you do this year, 2024."

Maybe not, however your actions this year may have implications next year when HMRC analyse the data they receive from digital platforms for your sales from 2024.

The deadline for the data to be provided for this year is not until Jan 31, 2025 so no-one knows what those implications could be until then at the earliest.  If your "knowledgeable guy" at eBay customer services told you not to worry about what you do this year he was clearly mistaken and in no position to give you that assurance.

[theelench]

I did a double-take when I read  "...I spoke directly to  a very knowledgeable guy in ebay customer services and....". 

I'm guessing you're not a regular on this board so haven't read the many posts where well regarded experienced sellers have contradicted CS and their statements ?  Often adding that CS now has a reputation for telling callers what they think they want to hear, to end the conversation ASAP.

But I'm sure ebay is concerned about this in the UK, they will remember the damage done when the US Tax Dept. decided it wanted their equivalent of N.I. Numbers, but they have no hope of reversing these new Reporting Rules in the UK.  Not only are they now UK law, but the Govt. has signed-up to an international agreement as a member of the OECD, probably not something that it's easy to get out of even if they wanted to.

But why would they want to ?

This agreement and the powers the HMRC has been given to do the job can only mean they smell more tax revenue resulting from it.  How they will use those powers is anyone's guess.

[ictiooclothing]

I do it as a hobby. I have a full time job but I enjoy doing EBay on the side. However, because I am buying to sell, I registered as a business. It's the right thing to do although when I did my first self assessment I was astounded how much tax I paid on very little profit but I will carry on regardless

[eastern-lights]

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@ictiooclothing wrote:

... I was astounded how much tax I paid on very little profit but I will carry on regardless

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Depending on your other earnings and hence which tax band you are in, 20% or 40% or 45% of your profit after deducting all expenses, surely. I suspect for most hobby businesses it is 20%.

[ictiooclothing]

I have another job (just over min wage)and it should be 20%. I had a tiny profit of £120 (building it up, wasn't trading for a full year so expected a small profit) and I got taxed £75. Maybe I did something wrong though 

[dwtrading2015]

There's a lot of misleding advice on this board.  Your emplyment status is irrelavant.  Your 'intention' is also irrelavant.  It dosn't matter whether you believe you are private, hobby, business or whatever.  If you make any kind of trade and are £1000 up, you should at the very least write to HMRC and declare the 'profit'.  If it becomes a regular thing, you will be asked to start doing self-assesment each year.  It can be a relatively simple proceedue where you declare money you paid to yourself rather than entering all the profit and loss stuff.  If you are that stage you will likely have a separate business bank account as your private current account dosn't normally allow business use.  Many used to use PayPal for that but eBay managed paments stoped that.  ANY form of trading, whether buying stock or selling what you all ready own (an inventory) IS a business activity.  eBay also demands that regular sellers define themelves as businesses too.

All that has changed is platforms like eBay will be required to share [more] lists of suspected traders appearing to generate a level of 'profit' which could result in income earned of over £1000.  Most people have evaded this to date for very low profit because it is difficult to spot amongst the noise in a typical current account.  Banks have a duty to allow HMRC to examine accounts through the money laundering laws, Blair, which can also be used to identify income from unidentified sources.  You then have to explain where the couple of grand a month on average is coming from and that the income is therefore currently taxed.

It is the same tax rules for everybody and nothing has changed.  What we are getting now though are a lot of people who have been hidding income which they should have been paying tax on moaning they are going to find it much more difficult to hide the extra income.

No matter who you are or how you go about it, if you make a profit over the stipulated threshold, it becomes taxable.  If you've been evading tax and are now going to be exposed and your records examined for the last 7 years (statute of limitatons), well tough - you shouldn't have been evading taxes to begin with.

And for those selling off collections and so on, you can make an estimate of amortised cost of purchase against sales and add up your profit or loss from that.  But be aware, HMRC have a very large database of similar estimates and if you try to be clever you may end up whith their estimate of additional income being applied and them taking an interest in your fnancial affairs. 

Declaring a couple of hundred extra profit 'to cover it' and ending up with £40 tax to pay through your PAYE over 52 weeks is worth it to keep your account out of the cross-hairs!!!!  Think it through.

Just be open and honest about your dealings and you'll simply pay normal tax owed like everybody else has to.