VAT ebay sales new rules

[george758555]

Hello, 

I am a private seller. I am slowly selling a railway model collection  that was left to me by a friend who died.

The items are used, but the values sold are over £ 1000 a year. Does this put me under the category of those who need to declare them for VAT ? Can someone advise ?

Thank you

[*vyolla*]

The VAT threshold is £85,000.

[george758555]

Hello and thank you for your prompt response.  What happens with income tax, I'm not sure about this new 1000 sales limit.

Thank you again

[*vyolla*]

There's a lot of confusing information out there.

So, if you're a small trader making bracelets at your kitchen table then you have a £1,000 allowance for sales before you have to declare this. You're technically a business because you're making items to re-sell. This allowance for small traders has been around for a while.

If you're a private seller selling off your own personal items from your wardrobe/attice/garage/collection then you shouldn't have to declare these sales and pay any tax unless you sell a single item with a value of more than £6,000 (then a tax called Capital Gains Tax will apply). I note that somebody from HMRC on the radio this morning mentioned that over 30 sales or earnings of over £1,000 per year will mean that sellers have to pay tax, but don't believe this to be correct. Just waiting for Martin Lewis to put something definitive together.

[4_bathrooms]

The £1,000 is the trading allowance; as the name suggests it only applies if you are trading. Trading means you bought or made items with the intention of selling them or are otherwise self-employed (like providing a service for a fee). Selling items you already own or selling items that were gifted to you is not trading so it isn't something you need to worry about.   

[pg_kicks]

The 30 items is the rule in Germany, not sure if we have just copied that ruling or it was a worldwide/EU+ thing. There was somebody on 5Live this moring who was equally as vague, it seems people arent really sure and not wanting to risk any comeback if they say something incorrect.

[*vyolla*]

Yep, you'd think that they'd get it right though. The Vinted sellers are in meltdown because the majority of them sell of their kids second hand clothes and easily sell more than 30 items per year if they've 3 kids. Sellers are having a freak out about that. 

Loads needs clarifying, even this from the BBC website:

Under the rules set out by the OECD, firms will not be asked to share data about sellers who make fewer than 30 transactions or €2,000 (£1,735) a year.

"It's only those people who are making a profit from selling second-hand items that might be eligible for tax and then it's about their own personal tax situation what tax would ultimately be due to HMRC," he said.

- It doesn't make it clear that it should be those sellers buying to resell second hand items and making a profit (so technically a business) that should be declaring. A mother selling her kids second hand clothing on Vinted should not be made to feel so vexed about this. As usual, it's all worded badly.

[pg_kicks]

The lady on this morning basically said anyone with sales of over £1000 should declare it to HMRC then later said if you are only selling your old clothes you wont be making a profit as you'd write it off v the original price so basically you'd be doing a tax return for £x loss, surely thats just going to cause a bigger issue for HMRC.

If done correctly it could work pretty close to perfect, you'd get a handful of people caught in the middle but thats easy to solve, as we stand you just have an actual mess with people having no idea. I'm sure there will be a lot of sellers sitting worried now though so havent done returns for the last 2 years who have sold a lot more than £1000 who are worried for any of those brown envelopes appearing.

[4_bathrooms]

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@*vyolla* wrote:

Loads needs clarifying, even this from the BBC website:

Under the rules set out by the OECD, firms will not be asked to share data about sellers who make fewer than 30 transactions or €2,000 (£1,735) a year.

"It's only those people who are making a profit from selling second-hand items that might be eligible for tax and then it's about their own personal tax situation what tax would ultimately be due to HMRC," he said.

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Ah, so that's the source (article here).

Just to clarify:

"From 1 January firms including Vinted, Airbnb, and eBay are obliged to collect and share details of such transactions with the tax authorities."

What the article fails to mention is that all those firms (including others such as Facebook, your bank, the DVLA...) have been sharing your details with HMRC since 2010. The only difference is that from yesterday they were obliged to share your data rather than sharing it pseudo-voluntarily. So, nothing has really changed.

Also:

"Online sellers already paying tax do not need to alter what they are already doing"

So, all the claims that business sellers trading through private accounts will somehow be forced to upgrade to business accounts have presumably gone out the window now.

[arkwebus]

To clarify about Vinted [not!].  It's somewhat different because if you originally bought clothing and sell for less are you not selling at a loss?

@george758555 

[*vyolla*]

Yes, you'd likely be selling for less than you paid for it, but profit/loss isn't a thing for a private seller listing their own personal/kids clothing anyway.

[*vyolla*]

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@pg_kicks wrote:

The lady on this morning basically said anyone with sales of over £1000 should declare it to HMRC then later said if you are only selling your old clothes you wont be making a profit as you'd write it off v the original price so basically you'd be doing a tax return for £x loss, surely thats just going to cause a bigger issue for HMRC.

---

Surely she's getting mixed up between private sellers listing items from their wardrobe and sellers who buy second hand clothing to re-sell?

You'd presumably be keeping purchase receipts if you're the latter, I'm pretty sure that nobody else does when they buy their kids a t-shirt, but I guess that if you could technically be quids in (particulary in you were working and earning over the single persons tax allowance)  if you bought all of your family clothes, keep the receipts and then sold them and made a loss and completed a tax return. 

[4_bathrooms]

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@pg_kicks wrote:

I'm sure there will be a lot of sellers sitting worried now though so havent done returns for the last 2 years who have sold a lot more than £1000 who are worried for any of those brown envelopes appearing.

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I think that just shows HMRC's latest "infomercial campaign" is having it's desired effect. 

[george758555]

Thank you for your helpful answer.

I suppose I will need to be ready to prove that they were gifted to me ?

Otherwise, I suppose we don't know the criteria to differenciate between private and business sellers, apart from what each user declares.

[pg_kicks]

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@*vyolla* wrote:

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@pg_kicks wrote:

The lady on this morning basically said anyone with sales of over £1000 should declare it to HMRC then later said if you are only selling your old clothes you wont be making a profit as you'd write it off v the original price so basically you'd be doing a tax return for £x loss, surely thats just going to cause a bigger issue for HMRC.

---

Surely she's getting mixed up between private sellers listing items from their wardrobe and sellers who buy second hand clothing to re-sell?

You'd presumably be keeping purchase receipts if you're the latter, I'm pretty sure that nobody else does when they buy their kids a t-shirt, but I guess that if you could technically be quids in (particulary in you were working and earning over the single persons tax allowance)  if you bought all of your family clothes, keep the receipts and then sold them and made a loss and completed a tax return. 

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Yeah I guess this is where the confusion begins, if you have 3 kids and you sell the old clothing and or toys you could well be over the £1000 and certainly the 30 items if its branded items. Thats not a business but they should still be doing a return if I read the new rules correctly.

[*vyolla*]

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@pg_kicks wrote:
Thats not a business but they should still be doing a return if I read the new rules correctly.

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I don't that they should, as a private seller selling off their own personal items, but stand to be corrected on that one.

[*vyolla*]

Easy to check here:

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

[papso22]

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@*vyolla* wrote:

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@pg_kicks wrote:
Thats not a business but they should still be doing a return if I read the new rules correctly.

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I don't that they should, as a private seller selling off their own personal items, but stand to be corrected on that one.

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You are quite right.  No genuine private seller will have to do anything different for tax than they do now.  Selling personal possessions is not subject to income tax.

[magpiecorner1]

No, the £1000 allowance is for self employed and businesses, handy for someone starting a business right at the tail end of the tax year, especially now that everyone is being moved to the April tax year, and to micro businesses turning over less than £1000 turnover.  Saves those who sell hobby items having to fret and saves HMRC having to process items.

Your item is free of any tax, because it is you own personal possession and because it is mechanical.  

[jodylf82]

You don't need to pay vat. But you will need to complete a self assement and pay tax on it as its over £1000 earned.