Can anyone help a newbie?

[Fozzmeister01]

Hello everyone,

Just found these forums and love all the information on it, i have a few questions.

A bit of background.

I have been collecting film memorabilia for the last 20 years (some of which i display and others which are just stored away) I have in the past year sold a few pieces on Ebay and discovered that there is quite a market for it. Now i am considering doing this as a part time business whilst still being in full time employment.

Questions

Some of the items which i purchased are from 2-20 years ago so i don't know the exact cost of these as i only have receipts up to about a year when the idea came to me. How would i put a starting figure on those items if i sold them and how would they be taxed?

If i purchased say 20 items at a total cost of £100 is it that easy to say the value is £5 a piece? Because in that bulk lot there could be an item which value is way more than £5. How would that work?

And lastly this is just an example, would this be correct?

I bought item A for £20 and sold it on Ebay for £80. The shipping cost was £3 so I was paid £83 by the customer. Now Ebay take 10% of £83 (£8.30) and Paypal take 3.2% of £83 as well (£2.65).

So if i shipped the item and it cost me £2.60 would this be how i am taxed?

£83-£20-£8.30-£2.65+0.40(difference in shipping charge and cost)= £52.45/20% = £10.49 taxable

Thanks for your help and i'm sure this won't be the only questions i ask you fine people.

Marc

 

[Alan]

Simply put, you would be taxed on profit

where profit = revenue - cost

revenue is the total amount received for everything, good, postage P&P whatever

cost is the total of the purchase price of goods plus any expenses, including expenses directly associated with the, and other expenses e.g. advertising, heat, light, broadband that are legitimate business expenses

The big issue you have is the value of the goods that you already have owned for ages. A tax expert may come along soon, but I feel for these items you may not be considered a trading business, and MAY be able to sell these as personal possession and MAY fall within Capital Gains (and hence you can sell 10,900 p.a. without even worring about tax)

 

[Scalloway]

I wouldn't worry about things that you have owned for some years unless you have made thousands of pounds of profit.

I bought item A for £20 and sold it on Ebay for £80. The shipping cost was £3 so I was paid £83 by the customer. Now Ebay take 10% of £83 (£8.30) and Paypal take 3.2% of £83 as well (£2.65).

So if i shipped the item and it cost me £2.60 would this be how i am taxed?

£83-£20-£8.30-£2.65+0.40(difference in shipping charge and cost)= £52.45/20% = £10.49 taxable

I make your taxable profit £49.45. You need to deduct the whole postage cost.

 

[Fozzmeister01]

Hi both,

Thanks for the replies, Scalloway why do i have to take the full postage cost off?

Also do i just not declare the tax on the old items i purchased years ago that had no receipts which were my collection?

By that i mean keep my personal items separate and then all the other items which i have receipts for. ( So basically two separate spreadsheets?

Thanks

Marc

 

[Scalloway]

You take the full postage cost of because that is a cost for your business. The P&P charge paid by the customer is business income. You make a business profit of 40p in the example you posted.

Yes keep a separate spreadsheet for personal items.