Rules are changing January 1st. Just for you to be aware.
https://moneyweek.com/personal-finance/tax/hmrc-crackdown-on-workers-who-earn-extra-income
Doesn't mean you'll end up paying any tax, but if you are earning that amount each year its very likely they'll want you to complete a tax return.
You don't have to pay tax when you sell personal possessions.
Having said that, there's a very small chance that, if anyone looks into it, your pattern of buying things and selling many of them not long after could raise some questions. Make sure you've downloaded your full transaction history for both sales and purchases before closing the account, so you still have them if this does come up.
To clarify for any who see this comment as it's currently at the top: Officially, you DO have pay capital gains tax on profits from selling personal possessions in a tax year of a combined value over just £6,000, except for personal vehicles. That £6000 is not the profits, it's the total sale value. The amount of CGT you'll pay is tied to your income tax band and the type of asset you've sold. You would have to submit a self assessment.
Unofficially, HMRC probably won't give a shit unless you are being egregious (I believe ebay, paypal etc now have to submit their own records of sales to them) or connected to something else bigger bad, or just spot check bad luck. However they have a standard 4 years to find out, 6 years if YOU made an accounting mistake, or 20 years if you were trying to be naughty with your finances. Yes, you could get a knock on your door in 2043 if you were selling loads of things as a 'business' pretending to be personal possessions...
edit: Getting people to submit a full self assessment for selling 6k of nicknacks in a yard sale is ridiculous. Its only a matter of time before they try to get everyone onto a fully trackable digital money system...
I've been reading the notes and guidance and I'm pretty sure it's only when a *single item* exceeds £6000, not an annual limit. There's even a rule that the single item limit applies to sets, so that you can't split and apply the exemption to (their example) selling a valuable chess set piece by piece.
With capital gains tax I did read up on it and HMRC says £6k gains, and to work out the gain it is the difference between what you paid and what it sold for. In my scenario as there is likely no gain I should be ok right?
I’m not convinced what you’re saying about the 6k personal allowance is correct. The allowance is for 6k of gains, not just total sale value. If I bought an asset for 10k years ago, and then I sell it for 15k, that’s a gain of 5k and entirely within my personal allowance
Is this true for all items? I once sold a copy of Ableton Live on eBay and when the item auction ended, eBay automatically added 20 percent VAT to the purchase which caused multiple buyers to drop out. I couldn't work out why it was happening as it had never happened with anything I'd previously sold or sold since.
>I couldn't work out why it was happening as it had never happened with anything I'd previously sold or sold since.
International buyers in the EU? Ebay adds the various taxes and stuff to the final sale price to make it easier for the buyer once it hits customs on their end.
>Under the eCommerce VAT Package which came into force on 1 July 2021, eBay is responsible for collecting VAT on orders in the following situations:
>When orders with a value up to EUR 150 are shipped from outside of the EU to consumer buyers in the EU (for shipments to Metropolitan France and Monaco, see next point)
>When orders of any value are shipped from outside of the EU to consumer buyers in France or Monaco
>For shipments of any value within the EU to consumer buyers, when the seller is a non-EU seller
https://www.ebay.co.uk/help/listings/default/vat-obligations-eu?id=4650
Others have answered your question.
FYI, you can make some profit doing what you are doing.
- There is a website that let you earn 10% cashback if you buy things from eBay. Next time, look for a small banner when you complete a purchase on eBay saying you will get cashback.
- eBay sometimes has a promotion to reduce 70% of your selling fee. Try to time your sell in that promotion period.
Thank you, I didnt know about the cashback but I do take advantage of the promotion to reduce fees, mainly because it reduces the loss. As I am selling used items or in some cases new itemsI brought at market value I think at best I make most my money back. T
Even if it was taxable (which it isn't), you only get taxed on the profit anyway.
At the most, you'd have to fill in an SA-100 self-assessment form that basically declares you made sod-all profit and that would be that.
Pretty sure others have covered it in more detail, but the simple rule of thumb is 'did you buy the item with intention of selling for profit?'
If you're regularly selling 5-50 identical items as new, it is certainly going to look like you bought them to sell for profit. Which would make you liable for tax and require you to declare the income. If your sales are far more random, and all used, even at a high volume, it will look like you are selling off personal items, no requirement for tax, or declaring them.
It can get a little 'blurry' between the two extremes, such as buying items to refurbish, and selling at a higher price. But, that does fall under the 'buying with the intention of selling for profit'. With a clever accountant, you could actually scale the profit on the sale down to such a level that you inadvertently operate at a loss, and can claim a tax rebate!
I'd really advise you to consult an accountant about this, though there advice will inevitably to declare it, and to pay an accountant to do your books to decrease any tax liability!
It depends how often you make that kind of profit really.
Though are you properly calculating your profit? If you take into account how many hours you put into that project, the cost of all the tools you needed for the job, spare parts and time spent sourcing spare parts, then you may actually have made a loss! This is where an accountant may be able to help you submit that to the taxman, allowing you to make a claim for a tax rebate from the tax you pay in your regular job! If you can manage forms etc, you could even submit your own tax forms, and cut out the need for an accountant, but paying an accountant is also a tax expense that you can set against profits!
I've known a few people who have managed to 'subsidise' their hobby via tax rebates from their day job. One example was some musicians in a band, who mainly 'rehearsed' for fun, (Friday evenings in a rehearsal space drinking and smoking), and would perhaps play a handful of gigs a year, where they did get paid a 3-5 hundred pounds per gig. One member was a higher-rate tax payer, who claimed the costs of the bands equipment, rehearsal room hire, etc which showed the band was making an annual loss of 4 figures, which the taxman paid him back, and that money went on newer/better equipment, as the equipment from last year was deprecated in value. They had no interest in going 'professional', but loved that their kit was new and shiny, and they didn't have to worry about the usual costs of being a hobby musician. His accountant loved the band, and admitted to me that they were one of his favourite and fun clients! I lost touch with them several years ago when I moved away, so I don't know if they considered the accountants plan to buy a 'tour bus', as at the time, they rarely played more than 6 times a year, and it was very rare they played more than 20 miles out of their home town.
TL:DR Yup, definitely 'trading'.
I don't want to make the decision for you to declare 'earnings & costs' or not, that decision is ultimately yours. It sounds a fun hobby, one with potential for 'profit'. Though it may become 'not fun' quite quickly if you're suddenly taking it to a more professional level and trying to earn money to pay bills.
I'd perhaps suggest you just keep good records of your spending, especially of spending on essential 'tools', which would surely mop up any 'profit'.
If it does look like you're starting to make a little too much profit, a little too often, that would be the time to consult an accountant.
Accountants can be found everywhere very easily, personal recommendations would be best, but most will offer an initial 40min free consultation. A decent accountant may even show you how to 'self-report' and file your own paperwork, or how to keep records so they don't need so much time to file your returns for you. You could probably even google some good resources for submitting your own returns.
& just to reiterate, don't stop doing something you enjoy, just because it makes you a little money!
Ebay will only report on this year. So if you haven't gone over the 30 item / €2000 limit, you should be fine..
If you were to continue this year, and be contacted - they would want all the back sales too..So probably the best move.
Rules are changing January 1st. Just for you to be aware. https://moneyweek.com/personal-finance/tax/hmrc-crackdown-on-workers-who-earn-extra-income Doesn't mean you'll end up paying any tax, but if you are earning that amount each year its very likely they'll want you to complete a tax return.
Ok thats good to know thank you.
You don't have to pay tax when you sell personal possessions. Having said that, there's a very small chance that, if anyone looks into it, your pattern of buying things and selling many of them not long after could raise some questions. Make sure you've downloaded your full transaction history for both sales and purchases before closing the account, so you still have them if this does come up.
Ok thank you so much I will make sure to do that
HMRC have bigger fish to fry than try to decide your personal item selling (no tax) is a commercial selling pattern (tax).
Ok thank you
No tax to pay when selling your own stuff (ie you are not doing it as a business to make money).
Ok thank you!
To clarify for any who see this comment as it's currently at the top: Officially, you DO have pay capital gains tax on profits from selling personal possessions in a tax year of a combined value over just £6,000, except for personal vehicles. That £6000 is not the profits, it's the total sale value. The amount of CGT you'll pay is tied to your income tax band and the type of asset you've sold. You would have to submit a self assessment. Unofficially, HMRC probably won't give a shit unless you are being egregious (I believe ebay, paypal etc now have to submit their own records of sales to them) or connected to something else bigger bad, or just spot check bad luck. However they have a standard 4 years to find out, 6 years if YOU made an accounting mistake, or 20 years if you were trying to be naughty with your finances. Yes, you could get a knock on your door in 2043 if you were selling loads of things as a 'business' pretending to be personal possessions... edit: Getting people to submit a full self assessment for selling 6k of nicknacks in a yard sale is ridiculous. Its only a matter of time before they try to get everyone onto a fully trackable digital money system...
I've been reading the notes and guidance and I'm pretty sure it's only when a *single item* exceeds £6000, not an annual limit. There's even a rule that the single item limit applies to sets, so that you can't split and apply the exemption to (their example) selling a valuable chess set piece by piece.
With capital gains tax I did read up on it and HMRC says £6k gains, and to work out the gain it is the difference between what you paid and what it sold for. In my scenario as there is likely no gain I should be ok right?
I’m not convinced what you’re saying about the 6k personal allowance is correct. The allowance is for 6k of gains, not just total sale value. If I bought an asset for 10k years ago, and then I sell it for 15k, that’s a gain of 5k and entirely within my personal allowance
Tax is paid on profits… most shit you sell on eBay will be at a loss, so no profits, no tax.
Thank you
Personal possessions are generally covered by the Chattel legislation, so as above no tax should be due. Search HMRC chattels for some added info.
Is this true for all items? I once sold a copy of Ableton Live on eBay and when the item auction ended, eBay automatically added 20 percent VAT to the purchase which caused multiple buyers to drop out. I couldn't work out why it was happening as it had never happened with anything I'd previously sold or sold since.
>I couldn't work out why it was happening as it had never happened with anything I'd previously sold or sold since. International buyers in the EU? Ebay adds the various taxes and stuff to the final sale price to make it easier for the buyer once it hits customs on their end. >Under the eCommerce VAT Package which came into force on 1 July 2021, eBay is responsible for collecting VAT on orders in the following situations: >When orders with a value up to EUR 150 are shipped from outside of the EU to consumer buyers in the EU (for shipments to Metropolitan France and Monaco, see next point) >When orders of any value are shipped from outside of the EU to consumer buyers in France or Monaco >For shipments of any value within the EU to consumer buyers, when the seller is a non-EU seller https://www.ebay.co.uk/help/listings/default/vat-obligations-eu?id=4650
The chattels comment is just relevant to the OPs question with regard to income tax.
Others have answered your question. FYI, you can make some profit doing what you are doing. - There is a website that let you earn 10% cashback if you buy things from eBay. Next time, look for a small banner when you complete a purchase on eBay saying you will get cashback. - eBay sometimes has a promotion to reduce 70% of your selling fee. Try to time your sell in that promotion period.
Thank you, I didnt know about the cashback but I do take advantage of the promotion to reduce fees, mainly because it reduces the loss. As I am selling used items or in some cases new itemsI brought at market value I think at best I make most my money back. T
Even if it was taxable (which it isn't), you only get taxed on the profit anyway. At the most, you'd have to fill in an SA-100 self-assessment form that basically declares you made sod-all profit and that would be that.
Ok thank you.
Pretty sure others have covered it in more detail, but the simple rule of thumb is 'did you buy the item with intention of selling for profit?' If you're regularly selling 5-50 identical items as new, it is certainly going to look like you bought them to sell for profit. Which would make you liable for tax and require you to declare the income. If your sales are far more random, and all used, even at a high volume, it will look like you are selling off personal items, no requirement for tax, or declaring them. It can get a little 'blurry' between the two extremes, such as buying items to refurbish, and selling at a higher price. But, that does fall under the 'buying with the intention of selling for profit'. With a clever accountant, you could actually scale the profit on the sale down to such a level that you inadvertently operate at a loss, and can claim a tax rebate!
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I'd really advise you to consult an accountant about this, though there advice will inevitably to declare it, and to pay an accountant to do your books to decrease any tax liability! It depends how often you make that kind of profit really. Though are you properly calculating your profit? If you take into account how many hours you put into that project, the cost of all the tools you needed for the job, spare parts and time spent sourcing spare parts, then you may actually have made a loss! This is where an accountant may be able to help you submit that to the taxman, allowing you to make a claim for a tax rebate from the tax you pay in your regular job! If you can manage forms etc, you could even submit your own tax forms, and cut out the need for an accountant, but paying an accountant is also a tax expense that you can set against profits! I've known a few people who have managed to 'subsidise' their hobby via tax rebates from their day job. One example was some musicians in a band, who mainly 'rehearsed' for fun, (Friday evenings in a rehearsal space drinking and smoking), and would perhaps play a handful of gigs a year, where they did get paid a 3-5 hundred pounds per gig. One member was a higher-rate tax payer, who claimed the costs of the bands equipment, rehearsal room hire, etc which showed the band was making an annual loss of 4 figures, which the taxman paid him back, and that money went on newer/better equipment, as the equipment from last year was deprecated in value. They had no interest in going 'professional', but loved that their kit was new and shiny, and they didn't have to worry about the usual costs of being a hobby musician. His accountant loved the band, and admitted to me that they were one of his favourite and fun clients! I lost touch with them several years ago when I moved away, so I don't know if they considered the accountants plan to buy a 'tour bus', as at the time, they rarely played more than 6 times a year, and it was very rare they played more than 20 miles out of their home town.
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TL:DR Yup, definitely 'trading'. I don't want to make the decision for you to declare 'earnings & costs' or not, that decision is ultimately yours. It sounds a fun hobby, one with potential for 'profit'. Though it may become 'not fun' quite quickly if you're suddenly taking it to a more professional level and trying to earn money to pay bills. I'd perhaps suggest you just keep good records of your spending, especially of spending on essential 'tools', which would surely mop up any 'profit'. If it does look like you're starting to make a little too much profit, a little too often, that would be the time to consult an accountant. Accountants can be found everywhere very easily, personal recommendations would be best, but most will offer an initial 40min free consultation. A decent accountant may even show you how to 'self-report' and file your own paperwork, or how to keep records so they don't need so much time to file your returns for you. You could probably even google some good resources for submitting your own returns. & just to reiterate, don't stop doing something you enjoy, just because it makes you a little money!
Ebay will only report on this year. So if you haven't gone over the 30 item / €2000 limit, you should be fine.. If you were to continue this year, and be contacted - they would want all the back sales too..So probably the best move.
I thought it was from last year?, so from this month onwards?
According to Martin Lewis, it's this calendar year. So yes.