ebay trading assistant business.do i pay tax on turnover or my commision

[DJE]

my questions is pretty much what the title says.

in a nutshell,an ebay trading assistant is someone who sells items for somebody else on ebay and takes a commision.

lets say i take 20% commision and my turnover is £100,000 meaning my cut is £20,000. now if i have to pay tax and vat on the £100,000 i will be left with nothing or the most likely outcome, owing money.

can someone please just clarify exactly how this works as i am offering a service but all the turnover will be going through my bank.

thanks in advance

[UKSEOAgency]

im sure you only pay tax on your profit.

which in this case i believe would be your commission

[Barnie]

2nd hand goods or brand new

[DJE]

2nd hand goods or brand new

at the start i will be dealing with mostly 2nd hand items that consumers give for me to sell but i will be moving onto brand new items that i will be selling for small businesses

[graemepirie]

You'll only pay tax on profits.

However your turnover will affect whether you have to register for VAT (and therefore charge and pay vat on all your sales.) If you are receiving 100K then you would have to register for VAT.

[DJE]

You'll only pay tax on profits.

However your turnover will affect whether you have to register for VAT (and therefore charge and pay vat on all your sales.) If you are receiving 100K then you would have to register for VAT.

yeh this is where i was getting confused because is it really my turnover or is my turnover classed as my commision.

because if get charged vat on my £100,000 turnover then that takes £15,000 which means im left with practically nothing.

[graemepirie]

Does the customer pay the full money to you and you then pay the supplier?

[DJE]

Does the customer pay the full money to you and you then pay the supplier?

yeh thats right.

there are lots of companies doing this type of business including flogit4u and auctionpeople and there turnover will defaintely exceed the vat limit.surely they must be paying on just there profits otherwise they wouldnt be in business

[graemepirie]

Maybe there's different rules for those acting as agents??

Sorry I don't know, hopefully an accountant will be along to help soon.

[seasider]

Only your commision should count as turnover but you need to make sure things are accounted for in the right way to be safe.

[Steve2507]

Turnover is income that goes through your business.

If your net income is £100,000 (meaning income not including VAT) then you need to register for VAT.

If registered for VAT you charge VAT to your customers. Any VAT you are charged can then be claimed against this.

So if you have a VAT income of say £4,000 in the quarter but you pay out £2,500 in VAT then you would need to pay £1,500.

The way you would work it is include the VAT in the amounts to the customer, so the customer pays you £115 for an item which equates to £15 VAT, £100 net cost. The supplier charges £50 plus VAT, which equates to £57.50. So net (not including VAT you have made a profit of £50 (£100 minus £50). The VAT element consists of £15 income (from the customer) and £7.50 outgoings (from the supplier) so you owe the VAT £7.50.


If on your £100,000 you have £80,000 expenses which makes £20,000 gross profit. Corporation tax (if you are a limited company) is then based on the £20,000.

Hope this helps.