Tony Lockhart
Avoiding Stress, at Every Opportunity
There are plenty of people who buy broken cars, fix them, and turn them around quickly. I should think they’ll be looking for receipts and invoices right now.
Ebay selling and TAX
- Thread starter matt j
- Start date
HMRC says CGT applies only to property that does not wear out (land, artworks, properties, shares, financial instruments etc). Profit from the sale of anything else is considered to be income.
wow&flutter
pfm Member
Should be easy enough for eBay to set criteria against everyone’s accounts be it based on value of items sold / number of items sold over a specific time period and anyone exceeds those limits get flagged. The same could be applied to Gumtree accounts.
I mentioned on here years back that there was around one seller per mile from me selling audio gear on Gumtree or eBay. There were so many that appeared to be doing it full time I gave up looking at listings as there was no way I could get to the sellers before the dealers could. Typically the gear would go from a local auction straight onto eBay of Gumtree, or from Gumtree to eBay with some even being recycled on the same platform!
I doubt many would reach the vat threshold but I can see some having tax implications if they were investigated.
A lost another friend in December last year who had a fairly large collection of audio gear. I spoke to his son and told him to go through each item individually to maximise the return for him and his sister and and I was there should he have any questions. I have seen a few items listed and it looks like he’s got it covered.
Of course the last thing this shower currently in office will do is go after the high value donors or mates when they can pick on joe public clearing their deceased family members homes!
I mentioned on here years back that there was around one seller per mile from me selling audio gear on Gumtree or eBay. There were so many that appeared to be doing it full time I gave up looking at listings as there was no way I could get to the sellers before the dealers could. Typically the gear would go from a local auction straight onto eBay of Gumtree, or from Gumtree to eBay with some even being recycled on the same platform!
I doubt many would reach the vat threshold but I can see some having tax implications if they were investigated.
A lost another friend in December last year who had a fairly large collection of audio gear. I spoke to his son and told him to go through each item individually to maximise the return for him and his sister and and I was there should he have any questions. I have seen a few items listed and it looks like he’s got it covered.
Of course the last thing this shower currently in office will do is go after the high value donors or mates when they can pick on joe public clearing their deceased family members homes!
laughingboy
pfm Member
HMRC have to assess tax according to law (statutory law and existing case law).
Income tax requires a relevant 'trade, profession, vocation or other business' (which the Part 2 of Income Tax Act 2007 says is defined by Section 3 of Income Tax(Trading and Other Income) Act). The key fact for box swappers is if there is no 'trade', there is no liability to tax.
Broadly, if you are not buying and selling to make a profit, you are unlikely to be liable to income tax because there is unlikely to be a trade. If you are simply box swapping as part of a hobby, you are not 'trading', for tax purposes.
And it pays to bear in mind that HMRC don't want to be too aggressive here, as they don't want to give people scope to claim their losses against other income.
Income tax requires a relevant 'trade, profession, vocation or other business' (which the Part 2 of Income Tax Act 2007 says is defined by Section 3 of Income Tax(Trading and Other Income) Act). The key fact for box swappers is if there is no 'trade', there is no liability to tax.
Broadly, if you are not buying and selling to make a profit, you are unlikely to be liable to income tax because there is unlikely to be a trade. If you are simply box swapping as part of a hobby, you are not 'trading', for tax purposes.
And it pays to bear in mind that HMRC don't want to be too aggressive here, as they don't want to give people scope to claim their losses against other income.
kensalriser
pfm Member
A distinction that is not being made in the news articles on this I've read; you have to be a frequent for profit trader who isn't registered as such with HMRC to be affected by this. Selling personal chattels is not taxed unless the proceeds per item are more than £6000.
It's actually something of a two-edged sword, because if you have an accountant who knows how to game the system you can set up your hobby as a business and then apply the loss to reduce the tax liability on your other income.
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ks.234
Half way to Infinity
Why won’t UK politicians address the biggest part of tax evasion in the UK, which is caused by the absue of limited liability companies due to poor state regulation?
As the Guardian notes this morning: Anyone selling used clothes on Vinted, renting out their home on Airbnb, or getting rid of old camera equipment on eBay is going to come under fresh scrutiny from the taxman, following a crackdown on income earned from online trading. From 1 January, HM...
www.taxresearch.org.uk
vacuum_tubes
pfm Member
Is a pension classed as a
If not why do you pay income tax on a pension then? The clue is in the "income" part.
Already explained that is could be covered by CGT but for 'box swappers' it is very unlikely
If you are a 'average seller' i.e PAYE or retired and don't file a self assessment you are supposed to pay capital gains on profit from (certain) stuff you sell but that's only above a value of £6000 for personal items (your annual CG tax free allowance) and if it has a lifespan of more than 50yrs.
I'd guess that the vast majority of box swappers would be well below the £6000 profit allowance, don't make a profit on the itemand it could easily be argued that electronics/hifi has a lifespan well below 50yrs.
TBF I'm not even sure if/how HMRC could correlate the data from ebay to the tax payer, I don't think I gave ebay my NI number when I registered.
I'd say that we're all fairly safe and have little to be worried about.
As Tony said earlier, there are plenty of people buying and selling cars, and this is no different. If you buy another car every year or two and sell the old one on, no problem. If you have half a dozen lined up on the driveway and sell a couple a week, you're a trader and you should be paying tax. Hifi, wristwatches, books, records are the same.
vacuum_tubes
pfm Member
You're arguing semantics now.
Traders operate with the intent of making a profit, box swappers are a completely different ethos.
Back in the real world, do you think HMRC are really going to come after a box swapper who replaces kit on a monthly basis but overall makes a loss or if he's lucky breaks even on buying/selling?
HMRC have indicators or "badges of trade" to determine if you are "working for yourself"
| Badge of trade | Guidance | Meaning |
|---|---|---|
| Profit-seeking motive | see BIM20210 | An intention to make a profit supports trading, but by itself is not conclusive. |
| The number of transactions | see BIM20230 | Systematic and repeated transactions will support ‘trade’. |
| The nature of the asset | see BIM20245 | Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possession’, for example, a picture for personal enjoyment? |
| Existence of similar trading transactions or interests | see BIM20270 | Transactions that are similar to those of an existing trade may themselves be trading. |
| Changes to the asset | see BIM20275 | Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit? |
| The way the sale was carried out | see BIM20280 | Was the asset sold in a way that was typical of trading organisations? Alternatively, did it have to be sold to raise cash for an emergency? |
| The source of finance | see BIM20300 | Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset? |
| Interval of time between purchase and sale | see BIM20310 | Assets that are the subject of trade will normally, but not always, be sold quickly. Therefore, an intention to resell an asset shortly after purchase will support trading. However, an asset, which is to be held indefinitely, is much less likely to be a subject of trade. |
| Method of acquisition | see BIM20315 | An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade. |
The big one there is "An intention to make a profit" as it implies intent, I would see a box swapper would be caveated by the "give ‘pride of possession’, for example, a picture for personal enjoyment?"
vacuum_tubes
pfm Member
I would caveat one piece of that though, Linn or Naim cannot bring any enjoyment so should be exempt
The Times article is a bit clearer -
"Anyone selling goods without intending to make regular profit, for example having a clear out and selling your old stuff online as a one-off, will not normally be considered as trading.
Selling personal possessions such as furniture, paintings or crockery also comes with an additional “chattels” allowance — typically HMRC does not need to know about this type of income unless more than £6,000 is made from the sale of a single item."
so the new rules are really only for those who are "Traders" not Fred Bloggs selling his old record player and amp and speakers
"Anyone selling goods without intending to make regular profit, for example having a clear out and selling your old stuff online as a one-off, will not normally be considered as trading.
Selling personal possessions such as furniture, paintings or crockery also comes with an additional “chattels” allowance — typically HMRC does not need to know about this type of income unless more than £6,000 is made from the sale of a single item."
so the new rules are really only for those who are "Traders" not Fred Bloggs selling his old record player and amp and speakers
I'm not arguing anything. I'm agreeing with you, haven't you read my comments? Did I not say "if you buy a new car every year or so and sell the old one, no problem"? Same goes for hifi. If you are a box swapper you are just the same as the car enthusiast who happens to buy and sell a car every so often. We all know the difference between a box swapper and a trader, whatever the item in question.
vacuum_tubes
pfm Member
My misunderstanding then, read your statement that you were aligning people selling hifi with car traders
You are a trader only if you are doing a steady and significant trade. If you have a driveway full of cars, hifi or records that you are selling, you are a trader. That's a significant amount of money. Obviously I'm not saying that a couple of records sold per week makes you a trader, but if you want to believe that I did, be my guest.
laughingboy
pfm Member
If you click on the link I provided to Part 2 of Income Tax Act 2007 you'll see all the charges to income tax (Section 3 (1) and 3(2) ). I was only addressing box swapping, which by its nature can only fall under trading (Section 3 (1) (d)).
I should have added 'in this case' before my statement about income tax requiring a trade, but I assumed it was understood that we were talking about eBay selling and tax.
vacuum_tubes
pfm Member
nope, it's not trading read my post #31 and explain why box swapping is trading.
laughingboy
pfm Member
We're on the same page. I'm saying it's not trading:
"If you are simply box swapping as part of a hobby, you are not 'trading', for tax purposes."
clivem2
pfm Member
It is very possible that revenue will be over £1k in this case so does the person need to fill out a self assessment form giving revenue - cost figures? Or does this become a grey area? It seems like you only fill out a self assessment form if HMRC think you are a trader…but how do you know whether they believe you are a trader? Rules vs interpretation…