could the new HMRC rules SEE A MASS EXODUS FROM E BAY

[reasonable-robert]

hi ...(quote)

From 1 January 2024, new UK digital sales reporting legislation requires eBay, and other UK digital marketplaces, to report a user’s sales over clearly defined thresholds to HMRC. 

For more information about UK digital sales reporting and what information will be shared with HMRC, visit our Help page.

Please also see guidance from HMRC for more information on when you may or may not need to pay tax for selling goods online.

It is important to be aware that this is not a new tax or a change to existing tax rules for people who use online marketplaces. 

Required UK digital sales reporting should only affect newly registered accounts in 2024 and all accounts in 2025 who pass either of the below calendar year sales thresholds on eBay: 

• Total sales on eBay is equal to or more than €2,000 (approximately £1,740) after deducting fees and commissions or taxes
• 30 or more sales transactions are completed on eBay (cancelled transactions are not included in the calculation)
• Starting from January 2025, the prior calendar year's information will be reported to HMRC each January and a copy of the reported data will be provided to sellers. We recommend that you consult HMRC or a tax advisor if you have any questions about your tax obligations. 

In order to pay tax on the goods or services you sell online, you either have to be trading or making a capital gain.

If you are just selling some unwanted possessions that have been lying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay income tax. If you sell possessions for more than you paid for them you may have to pay capital gains tax, but only if you exceed your annual allowance for such gains (currently £6,000). For more information on capital gains tax on personal possessions, see guidance from HMRC.

If you buy goods for resale, or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profits.

However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you would not be required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance). .......(unquote)

so unless you,re a freind of the tories, non dom, a member of the royal family or own a big business then the tax man will be after you.

the fall out as many people have said will be sellers looking elsewhere to sell.

facebook could only comply if you sell on the marketplace as the local sites are independantly run by individuals acting as admins so they would have to get every site to report sellers over a certain threshold which couldnt realisticly be done.

meanwhile back at e bay could this see a mass drop in members, sales and sellers both business and private walking away from e bay as 30 transactions in a year is easily achieveable in just one month.

it looks as if e bay could finally morph into the rival shopping destination to amazon its desperate to become and before the B.S clap their hands and cheer remember that when people walk away theres only those who are looking for certain items that you may sell left.

lots of competetitors selling the same thing not just here but on amazon and other sites and the chinese sellers....call it reality.

now lets have a sensible discussion without silly comments please.     

[vintique*violet]

Thank you so very much for your reply... I am trying to understand more as I think people are getting confused between private sellers and business sellers - the tax and capital gains implications. 

[vintique*violet]

Thank you for the information. 

[the_book_seekers]

The distinction between business and private sellers is not a financial one. As has been said if you are selling off personal items you're a private seller. Make or buy an item with the intention of selling it and you become a business no matter what the amount is. The £1000 trading allowance is for businesses selling below this limit. Anyone using it needs to report it to HMRC. I read recently of a guy who was under the £1000 limit but didn't inform HMRC and got a fine for his trouble. 

Capital gains tax applies to private sellers. Sell an item over the current limit which is not covered by the exemptions and tax will be due on any profit made. 

[sml192]

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@the_book_seekers wrote:

The £1000 trading allowance is for businesses selling below this limit. Anyone using it needs to report it to HMRC. I read recently of a guy who was under the £1000 limit but didn't inform HMRC and got a fine for his trouble

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Informing HMRC is not a mandatory requirement, if a business has a turnover of £1,000 or less, but there are certain circumstances under which HMRC must be informed and a self assessment completed. 

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#insa

[signs_and_vintage]

That's exactly how I read it and surely the point of the rule - earn less than £1000, no need to declare at all, can register voluntarily if you want (especially if you think it will be over that amount the next year).

[ett1954]

"earn" - It is actually income; not profit as 'earn' suggests.  This includes any monies received during the transaction such as postage costs.

There is a question on the self assessment form asking whether you wish to invoke the trading limit which obviously makes the completion of the self assessment form easier for those who  are applicable.

[signs_and_vintage]

But most won't get the distinction. And you can't blame them.

However, it IS a welcome buffer zone between, for example my partner taking a small amount of money for doing a presentation, once a year beside their full time employment. Previously it would have been a case of 'oh no, how do I declare this £200, is it worth it, probably not, damned if you do etc...'.

[simitra]

Remember that when you fill in a self assessment form you only pay tax on your profits. You are allowed to make a deduction for business expenses. If you run your Ebay business from home this includes a % of your household expenses such as heating/c tax/rent or mortgage etc as well as selluing fees, postage, etc etc. So the amount you pay could well be minimal if you include everything down to the last pen/camera battery and paper clip. Its not difficult to make a business loss when you begin a new side hustle. Many businesses take 3/4 years to get into profit and some never do. Providing you use traditional accounting (as opposed to cash basis) any business loss can be set against other taxable income such as employment or pension income.

[vintique*violet]

Considering they now want to hold our funds and we have to upfront postage fees and wait for  a delivery notification and A.I.  approval status to receive them - more will stop buying ( sorry business sellers ) and leave IMO. 

[vintique*violet]

• Starting from January 2025, the prior calendar year's information will be reported to HMRC each January and a copy of the reported data will be provided to sellers. We recommend that you consult HMRC or a tax advisor if you have any questions about your tax obligations. 

Hold on - what will this data include?

Sales and/or purchases? 

What other sort of " data" - messages? 

If purchases too, then are they not  breaking privacy rules? 

[myriad*seller]

For a private sellers, at the very minimum, the gross turnover and National Insurance number 

[vintique*violet]

Thank you... well that is interesting as National Insurance numbers are not a form of identity... also must only be divulged between HMRC and your employer ( if you have one) ... 'Turnover" is a term for business, selling a few items is not a " turnover" so how are they to distinguish this, also £1000 per annum is nothing, in this day and age. 

£12570  Personal allowance tax free....

Those on minimum wage or even part time I would have thought do not pay any tax so a few thousand a year on eBay would probably not affect. 

The sharing of our data with third parties is actually unlawful but because Government introduced " legislation" which is not actual law, companies ( who in my opinion have joined hand in hand with them) will follow those " guidelines"...albeit we have the right to " privacy" under Article 8 of the Human Rights Act... yet due to new introductions of " for your safety, health, crime, economy  national  security etc" this has pushed the boundaries BUT they have to show that any action is proportionate and lawful.

The true " revealer" here is to out those who are on benefits and receiving undisclosed income.

With the addition of, " considered a trader" so that eBay can force people to register as a business and claim business fees. 

I could be totally wrong in my thinking but just off the top of my head thats where I am at the moment. 

[myriad*seller]

Ok not gross turnover, gross sales receipts- the total funds that the seller received into their ebay account since January 2024. 

Nowhere in my post did I say HMRC would force people to be traders

I simply answered "what information will eBay  be providing to HMRC?"

[vintique*violet]

Okay total funds... right... 

So as an advisory to anyone reading  - Remember to make it clear what your costs are to offset against gross sales... this includes any postage you have paid , packaging, fuel for any post office trips, allowances for " working" from home  etc etc ... research what is allowed and deduct to provide a net figure.  They cant have it both ways... "penalise" if selling 31 items per year or £1001... AND not take into account the relevant allowable expenses. IMO

I didn't say HMRC would force - I said eBay would probably determine private to move to business on their platform to garner fees. 

[dch2112011]

What you may see is genuine private sellers who become worried by the whole HMRC saga  stop selling online - until they get fed up with the hassle of car boots 

What you may also see is the traders using a private selling account multiply their ebay accounts to different family names to make the sales look low 

Then again you may see an increase in private sellers continuing as the lure for free sales gathers momentum  

[theelench]

I'm guessing that you're a business seller and have some experience of dealing with HMRC?  So have some confidence about how to deal with them?

I was self-employed for 30 years and also have some experience, but none when it comes to dealing with them as a retail business trader.

I do know just how time consuming and intricate all the record keeping and financial book keeping can be that's necessary before I even got to filing a tax return.  When I retired from business I went to some lengths to ensure that all my income was PAYE, just get away from it all and keep my tax affairs as simple as possible.  I have no intention of keeping business level books that will be required to fend off any enquiries from HMRC in order to sell a few collectables each year.

PAYE is the only thing that most people 'know' about HMRC and actually, in many cases, have very little idea of how even that works.  Most on benefits, state pensions or non-working 'home builders' don't even  have that knowledge.  The only thing that they do know about HMRC is its fearsome reputation and sometimes ruthless approach to collecting what it decides is due to it.  Talking to some in my local and mention "Tax Return" or "Books" and all too often looks of shock or horror will spread across their faces. 

The mere thought of any involvement with HMRC will horrify all too many genuine private sellers, especially now that HMRC have caught-on to how much they can wring out of tax-payers using fines and penalties for innocently getting things wrong, not keeping accurate enough records, doing things too late and of course interest on late payments, under-payments etc all well publicised. 

They certainly have NO reputation for fairness or humanity or for acting in line with the basic tenet of our justice system that one is innocent until proven guilty.   With HMRC the accused is definitely guilty until they can prove beyond the slightest doubt in HMRC's mind that they are innocent.

I don't think it's going to be a case of " We may see.... private sellers stop selling on-line", I think it's an absolute certainty that a great many will stop.  I don't think most will even bother with boot fairs especially when they read scare stories (like I just have) of tax collectors taking their dues at the gates.

I agree with your second paragraph.  Professional crooks will be crooks and will try anything rather than pay what they should.

I said elsewhere that IMO the lure of Free to Sell on ebay will be short-lived for many when they realise that ebay is configured against private sellers and that unless they Pay to Promote they won't sell much and in many cases they might only sell a few things to 'bargain hunters' at fire-sale prices.  But when (after Payment Holds) they get their money, they'll decide it wasn't really worth all the effort and hassle and decide not to bother again.

[papso22]

We have been discussing these reporting requirements , and the requirement to provide NI numbers, on these boards for the last 11 months and all that can be said will have been said, both for and against.

Just to clarify, the HMRC reporting limit coming in next January is 30 items or the £ equivalent of 2,000 Euros.  The £1,000 limit is a trading allowance, nothing to do with genuine private sellers and nothing to do with the reporting requirements to HMRC.

Also Ebay are permitted to ask for NI numbers in order for HMRC to identify the members with the accounts.  It certainly is not a breach of any regulations. 

[lucy_farmer]

'The only thing they do know about HMRC is it's fearsome reputation and sometimes ruthless approach to collecting what it decides is due to it....'

Yes, in a nutshell. Most people who don't have to fill in a tax return are pretty terrified of putting a foot wrong, or making a genuine mistake. (even though the amounts of money being disputed are soooo small they aren't going to touch the sides of 'The National Debt', whilst chasing just one of The Big Boys would be enough to pay for the heating in all pensioners' homes this winter....)

And their 'ruthless approach' is allied to their total blindness to the average person's understanding (i.e. complete lack of!) of tax and the HMRC.

This 'blindness' doesn't help when trying to get help and advice from HMRC......

My husband's cousin died last summer, un-married, no offspring and intestate, and it turned out hubby was his last living relative.

The tax office kept sending fines because cousin hadn't submitted his final tax return (it was due 2 days after he died and he had been in hospital for the 3 weeks beforehand). This were arriving *after* the tax office had been informed he was dead, so we phoned to find out what the hell was going on (only took 15 mins for the call to be answered 😯 ....if you're going to call HMRC, do it at 9.00am on the dot!)

Turns out it was now hubbys responsibility to submit said tax return.

Oh right.

We explained we hadn't seen this cousin for about 17 years, and had no idea what he did for a living , and how on earth to do this?

Response from HMRC was basically ; "Tough. Have a look at his bank statements and sort it out for yourselves".

(If cousin had actually had any  money or a house or *anything*, it may have been worth the sheer hassle...... but he was as skint as we (still) are!  🙄)

[vintique*violet]

I have not been on this " board" until recently to " participate"... so excuse me if I am asking questions that may have been discussed prior.  Plus information here , for the most part has been informative and helpful from kind participants, many of which are long standing eBay sellers and have more knowledge from experience.  Just because someone has an Ebay account does not mean that they have all the information or understand it, particularly with all the changes.

Years back HMRC made it known not to divulge your personal national insurance number other than to them and/or your employer.  What safeguards are in place with eBay to prevent your National Insurance number ( or other personal information for that matter) getting into the wrong hands? We do not know where it is going, who is processing it,  and what other " third parties" have access to personal  data as eBay do not disclose.  Too much fraud these days particularly online. 

Asking  for your personal details does not mean you have to give them, and that is a choice for everyone to make due to their individual circumstances.

[theelench]

Exactly, I skimmed an article on my "News feed" recently.  Someone was being chased for an unpaid tax bill of £79, with the fines, penalties and interest the final bill was over £700.

That's why, when the new reporting was first announced and was being discussed here, I found the soothing opinions that at first HMRC would send "nudge letters" hard to believe (although someone did post a copy of such a letter).  IMO if HMRC is faced with thousands of "suspect" private sellers from all the different selling sites, that softly, softly approach will soon disappear (if it is ever started) in favour of "if in doubt, send a tax return" and start the clock ticking on the penalty fees and fines.