E-bay and HMRC

[LeasingEval]

Been dabbling a little with ebay and just a little curious about this...I underdstand that once a seller passes the £1000 trading limit then they will send the sellers details and sales info to HMRC for income tax purposes.

Tax is paid on trading profit - but E-bay only knows about the final sale price.
So if, for example, I buy a high-end gaming PC for £2000 and a few months later decided that I'm not that into PC gaming after all and offer it for sale on E-bay for £1100 and someone snaps my hand off to buy it - do I have to pay tax on this "income"? How do HMRC know that I didn't actually make a profit from the sale?

If the info has to be passed to HMRC - could I claim a £900 trading loss on the above deal and offset the loss against the income tax that I pay via PAYE on my day-job?

 

[MyAccountantOnline]

Been dabbling a little with ebay and just a little curious about this...I underdstand that once a seller passes the £1000 trading limit then they will send the sellers details and sales info to HMRC for income tax purposes.

Tax is paid on trading profit - but E-bay only knows about the final sale price.
So if, for example, I buy a high-end gaming PC for £2000 and a few months later decided that I'm not that into PC gaming after all and offer it for sale on E-bay for £1100 and someone snaps my hand off to buy it - do I have to pay tax on this "income"? How do HMRC know that I didn't actually make a profit from the sale?

If the info has to be passed to HMRC - could I claim a £900 trading loss on the above deal and offset the loss against the income tax that I pay via PAYE on my day-job?

You have to establish whether your are trading or simply selling personal items - have a read up on the 'badges of trade'

You cant claim a tax loss selling something you purchased for personal use at a loss.

 

[LeasingEval]

Ah ..badegs of trade...I had no idea such a concept existed - thank you!

I am curious about the mechaniusm though - I presume that E-bay are simply going to send a name, address, bank account number and cash total through to HMRC - rather then the details of every hat, coat and scarf that I have sold on e-bay?

So do E-bay apply the badges of trade rules to decide what should be reported to HMRC?
Or do they simply send the data of every customer who crossed the threshold?

I am guessing it will be the latter and then HMRC will use their 5000 new tax inspectors to harass everyone who has crossed the theshold on ebay sales?

 

[MyAccountantOnline]

Ah ..badegs of trade...I had no idea such a concept existed - thank you!

I am curious about the mechaniusm though - I presume that E-bay are simply going to send a name, address, bank account number and cash total through to HMRC - rather then the details of every hat, coat and scarf that I have sold on e-bay?

So do E-bay apply the badges of trade rules to decide what should be reported to HMRC?
Or do they simply send the data of every customer who crossed the threshold?

I am guessing it will be the latter and then HMRC will use their 5000 new tax inspectors to harass everyone who has crossed the theshold on ebay sales?

I dont know exactly what information is sent by Ebay to HMRC once the threshold is crossed but they wouldn't be looking at the badges of trade, that's something you as an individual need to consider in deciding if you are trading.

 

[LeasingEval]

...or even if you're not trading but just used ebay to sell an item costing more than £1000 - a car for instance. (Ebay currently has more than 180,000 cars priced over £1000 for sale).

I have a strong feeling that everyone who has had an ebay balance over £1000 in a 12 month period is going to be getting harassed hard by HMRC soon.

 

[Newchodge]

Ah ..badegs of trade...I had no idea such a concept existed - thank you!

I am curious about the mechaniusm though - I presume that E-bay are simply going to send a name, address, bank account number and cash total through to HMRC - rather then the details of every hat, coat and scarf that I have sold on e-bay?

So do E-bay apply the badges of trade rules to decide what should be reported to HMRC?
Or do they simply send the data of every customer who crossed the threshold?

I am guessing it will be the latter and then HMRC will use their 5000 new tax inspectors to harass everyone who has crossed the theshold on ebay sales?

You will need to complete a self assessment return, which will tell HMRC what your sales have been and what our expenses have been, you will pay tax on the difference.

 

[Newchodge]

...or even if you're not trading but just used ebay to sell an item costing more than £1000 - a car for instance. (Ebay currently has more than 180,000 cars priced over £1000 for sale).

I have a strong feeling that everyone who has had an ebay balance over £1000 in a 12 month period is going to be getting harassed hard by HMRC soon.

They realy don't have the staff to do that. They may look at a sample few, but they can't look at everyone. They will start by looking at those who don't complete self assessment.

 

[LeasingEval]

Yep - this is what I think the case will be- if I sell my car on ebay then I will need to complete a self assessment.

 

[LeasingEval]

They realy don't have the staff to do that. They may look at a sample few, but they can't look at everyone. They will start by looking at those who don't complete self assessment.

They are hiring 5000 new inspectors - they will need something to keep them all busy!

 

[JEREMY HAWKE]

...or even if you're not trading but just used ebay to sell an item costing more than £1000 - a car for instance. (Ebay currently has more than 180,000 cars priced over £1000 for sale).

I have a strong feeling that everyone who has had an ebay balance over £1000 in a 12 month period is going to be getting harassed hard by HMRC soon.

Oh dont worry about that
That whole set up is full of private individuals selling lots of vehicles for profit its an absolute shower.

People on here talk about the tax implications of selling a pair of woolly gloves on auction sites and all the while a massive con is going on with more expensive items

 

[Deleted member 351022]

Yep - this is what I think the case will be- if I sell my car on ebay then I will need to complete a self assessment.

No . Not if it’s your personal car . You have no need to worry if you are just selling your own stuff- as that’s usually less than you originally paid for it.
All the platforms and HMRC have put out loads of publicity on this to reassure people selling their unwanted possessions have nothing to do to worry about.

There are no new tax rules at all . Whats happening is that the likes of eBay are now being required to report sales so HMRC can catch up with those people trading who haven’t correctly reported their earnings.

 

[LeasingEval]

I am assuming this reporting to HRMC will be triggered from an automated set of rules..had a look in the ebay small-print today and they say the will report on earnings of over £1700 or 30 trades within a calendar year.

It can't/won't differentiate between me selling 30 of my old DVD's or flipping 30 items for a profit.

I suspect that in December a whole lot of people are going to be forced to submit a tax return based on their ebay activity.

 

[Deleted member 351022]

www.gov.uk/guidance/check-if-you-need-to-tell-hmrc-about-your-income-from-online-platforms

 

[LeasingEval]

So the title of that web-page is "Check if you need to tell HMRC about your income from online platforms". The change that ebay are making is to remove you from that loop - they are communicating direct with HMRC about your ebay earnings.

So my question is: what will HMRC do with this information?
We will assume that they aren't going to sit and sift all your ebay transactions to determine how many are you selling personal posessions and how many look like a side hustle.

So, knowing that you have crossed the trading allowance threshold, will they

(a) Ignore the intel sent by ebay and wait for people to come to them
(b) trigger an automated letter informing you that you have undeclared income and must now complete a self-assessment?

For some people filling in a self-assessment is trivial, but for others with more complex circumstances they may need an accountant.

I think that's an important thing to know if you are deciding on whether to sell your car on e-bay or trade in with a car dealer etc.

 

[DWS]

So the title of that web-page is "Check if you need to tell HMRC about your income from online platforms". The change that ebay are making is to remove you from that loop - they are communicating direct with HMRC about your ebay earnings.

So my question is: what will HMRC do with this information?
We will assume that they aren't going to sit and sift all your ebay transactions to determine how many are you selling personal posessions and how many look like a side hustle.

So, knowing that you have crossed the trading allowance threshold, will they

(a) Ignore the intel sent by ebay and wait for people to come to them
(b) trigger an automated letter informing you that you have undeclared income and must now complete a self-assessment?

For some people filling in a self-assessment is trivial, but for others with more complex circumstances they may need an accountant.

I think that's an important thing to know if you are deciding on whether to sell your car on e-bay or trade in with a car dealer etc.

HMRC may well send letters out advising that you may have to submit a tax return, it is up to the individual to determine whether they do or do not, that is the whole purpose of Self-Assessment, if you are happy that you are not trading then ignore any letters sent, if you are actually trading as a business then HMRC are giving you the nudge to submit a tax return.

 

[Deleted member 351022]

If you had just scrolled down to the bottom of the page there’s another link. It tells you there what information the platforms are reporting and also that they must provide you with the information they have provided to HMRC.

www.gov.uk/guidance/selling-goods-or-services-on-a-digital-platform

EBay and the like are not removing you from the requirement to register for self assessment or complete a self assessment return if you need to do so.

 

[LeasingEval]

HMRC may well send letters out advising that you may have to submit a tax return, it is up to the individual to determine whether they do or do not, that is the whole purpose of Self-Assessment, if you are happy that you are not trading then ignore any letters sent, if you are actually trading as a business then HMRC are giving you the nudge to submit a tax return.

That's not my experience of HMRC - they force you to submit a self-assessment by a deadline or apply a penalty - even if the self-assessment shows that you don't owe any tax. For many self-assessment is trivial, but for anyone with more complex circumstances it may require them to pay an accountant.

 

[LeasingEval]

I have lost count of the number if people I have spoken to over the years who have a business idea they would like to explore, but the main reason they give for not doing so is that they can't be bothered with the hassle of dealing with HMRC. E-bay used to be a good platform to encouragre entrepreneurship but I feel this change will have a detrimental effect on that.

 

[DontAsk]

That's not my experience of HMRC - they force you to submit a self-assessment by a deadline or apply a penalty - even if the self-assessment shows that you don't owe any tax. For many self-assessment is trivial, but for anyone with more complex circumstances it may require them to pay an accountant.

That's correct. If you need to complete SA you will be told to do so, and required to do so. There's no may have to, or personal choice, about doing SA.

If in future you do not need to do SA, HMRC will write to you and tell you so.

Don't do a SA on the off-chance, as the SA and PAYE systems are not linked and it can lead to problems as I have just experienced. We did a SA for my wife's savings interest and paid the required tax but the savings institutions informed HMRC of the interest (as they are required to do, like eBay with sales). The PAYE system was going to alter her tax code to take the same amount again.

 

[DontAsk]

PS We have had very good experiences with the HMRC helplines, once by on-line chat and once by 'phone. Both were answered quite quickly (none of the horror story of long waits) and staff were knowledgeable and helpful.

I don't recognise any of the HMRC bashing I see in the media.

 

[Paul Norman]

I have lost count of the number if people I have spoken to over the years who have a business idea they would like to explore, but the main reason they give for not doing so is that they can't be bothered with the hassle of dealing with HMRC. E-bay used to be a good platform to encouragre entrepreneurship but I feel this change will have a detrimental effect on that.

I am not certain that if a potential entrepreneur gives up at the prospect of filing a tax return, it may be best to discover that early on.

Because filing tax returns is a reality of being an entrepreneur.


However, it is, I suspect, inevitable that some people just trying to sell some personal stuff will hit the hurdle. I am not clear exactly how the HMRC will seperate one person selling some old clothes they no longer can wear with another person effectively running a side hustle that is quite properly a taxable gig. I will leave that answer to the accountants.

 

[DWS]

That's not my experience of HMRC - they force you to submit a self-assessment by a deadline or apply a penalty - even if the self-assessment shows that you don't owe any tax. For many self-assessment is trivial, but for anyone with more complex circumstances it may require them to pay an accountant.

They don’t force you, they merely notify you that you need to submit a return but this can be cancelled if you believe it incorrectly issued.

 

[DWS]

That's correct. If you need to complete SA you will be told to do so, and required to do so. There's no may have to, or personal choice, about doing SA.

If in future you do not need to do SA, HMRC will write to you and tell you so.

Don't do a SA on the off-chance, as the SA and PAYE systems are not linked and it can lead to problems as I have just experienced. We did a SA for my wife's savings interest and paid the required tax but the savings institutions informed HMRC of the interest (as they are required to do, like eBay with sales). The PAYE system was going to alter her tax code to take the same amount again.

There is a personal choice actually you can ask for a self assessment to be withdrawn

 

[JEREMY HAWKE]

That's not my experience of HMRC - they force you to submit a self-assessment by a deadline or apply a penalty - even if the self-assessment shows that you don't owe any tax. For many self-assessment is trivial, but for anyone with more complex circumstances it may require them to pay an accountant.

Business is not a game nor is it for everyone
If you can't deal with the demands from HMRC then stay well away any activities that may require you're reporting of your circumstances

 

[japancool]

E-bay used to be a good platform to encouragre entrepreneurship but I feel this change will have a detrimental effect on that.

You mean - entrepreneurs shouldn't pay tax?

 

[LeasingEval]

You mean - entrepreneurs shouldn't pay tax?

Yes of course they should, but not every kite flies.

 

[eteb3]

That’s what the £1000 limit is for.

If the kite crashes, you can claim the loss against your eventually successful venture.