HMRC and Ebay - New Rules come into play

[Sjcm]

probably!

[sjp23480]

And there is a self checker here to assist as well

https://www.gov.uk/check-additional-income-tax

 

Interesting that if you follow this self checker, you can sell up to £6000 of personal possessions before HMRC will take an interest 

[andyman7]

1 hour ago, sjp23480 said:

And there is a self checker here to assist as well

https://www.gov.uk/check-additional-income-tax

 

Interesting that if you follow this self checker, you can sell up to £6000 of personal possessions before HMRC will take an interest 

These are all clues about the kinds of things that may trigger an enquiry from HMRC. It doesn't of course mean that tax is due but it is pretty safe to assume that if you are selling bits of your model railway collection online in excess of the amount that means ebay or whoever will report it but below these sorts of figures and there are no other flags (e.g. lifestyle out of keeping with your declared income, large unexplained back account movements) they won't be bothered to even ask.
The self-checker is pretty obviously oriented to pick up those sorts of activities that are liable for tax but that people can 'overlook', i.e. renting a room or doing odd jobs

[DCB]

I wonder if it might be worth registering as self employed if HMRC come a hassling and then piling on the expenses of running a car to get my stuff 10 miles to the post office, Business use insurance and everything so I make a substantial loss every year which presumably i can offset against other tax liabilities?   My eBay sales go into a separate Bank account and purchases and expenses such as postage come from the same account,.  After about 4 years it has about £200 in it so I'm not exactly making a fortune, even if my spare stock shelf is groaning under the weight of the bargains and non runners I have acquired.  If I bought my glue and paint on the same account I wouldn't even have that much.

[andyman7]

Just now, DCB said:

I wonder if it might be worth registering as self employed if HMRC come a hassling and then piling on the expenses of running a car to get my stuff 10 miles to the post office, Business use insurance and everything so I make a substantial loss every year which presumably i can offset against other tax liabilities?   My eBay sales go into a separate Bank account and purchases and expenses such as postage come from the same account,.  After about 4 years it has about £200 in it so I'm not exactly making a fortune, even if my spare stock shelf is groaning under the weight of the bargains and non runners I have acquired.  If I bought my glue and paint on the same account I wouldn't even have that much.

If you can be bothered with the hassle then indeed it might. There's a reason why people who want to make serious money tend to steer clear of model railways 🙂

[Hal Nail]

8 hours ago, DCB said:

I wonder if it might be worth registering as self employed if HMRC come a hassling 

 

They would assume you've been trading for years and slap penalties on you for not registering when you should have done.

 

You can't just offset losses against other income streams otherwise anyone with a job would do this.

 

Worth repeating what we concluded very early in this thread that people doing a bit of selling of old stuff aren't being targeted here.

Edited January 6 by Hal Nail

[Crosland]

11 hours ago, andyman7 said:

There's a reason why people who want to make serious money tend to steer clear of model railways 🙂

You can make a small fortune in model railways. If you start from a large one 😁

[Bernard Lamb]

19 hours ago, DCB said:

I wonder if it might be worth registering as self employed if HMRC come a hassling and then piling on the expenses of running a car to get my stuff 10 miles to the post office, Business use insurance and everything so I make a substantial loss every year which presumably i can offset against other tax liabilities?   My eBay sales go into a separate Bank account and purchases and expenses such as postage come from the same account,.  After about 4 years it has about £200 in it so I'm not exactly making a fortune, even if my spare stock shelf is groaning under the weight of the bargains and non runners I have acquired.  If I bought my glue and paint on the same account I wouldn't even have that much.

AFAIK you do not have to 'register'.

If you are working as self employed as well as having a proper job, then you just need to send in a tax return with the relevant figures for your self employed income. They will probably accept these without question, providing that you claim a reasonable level of expenses. Depending on the amount of tax due they will either adjust your tax code or ask you to pay a lump sum. You can actually have several seperate self employed  accounts, providing you send in the figures for each HMRC will sort it out for you. They even manage to deal ith overseas income that is not brought into the UK.😀 I have had problems, but in general HMRC do a good job. It is the governemt who frequently change the rules and cut back on staff, in my experience, who cause most of the problems.

Bernard

[CalyClive]

If I can just add a little more fuel to this discussion what peaked my interest was the mention of platforms reporting NI details as:

 

"Websites will have to collect data about sellers. For individuals, this will be their name, address, date of birth and national insurance number, plus what they have earned and paid in fees on the platform."

 

This is lifted from a Guardian article that I posted a link to on another thread. So one assumes that Ebay will require a valid NI number for any seller account - interested how that will impact those who buy under one account and sell under another.

[Hal Nail]

On 06/01/2024 at 18:48, Bernard Lamb said:

AFAIK you do not have to 'register'.

You are required to register.

 

You pay weekly class 2 NI from the date you start, as well as class 9 on the profits. After the first year they ask for payments on account for income tax as well rather than at the year end.

 

edit. agree with you on the end bit. whenever I've spoken to them they've generally been knowledgeable and even helpful but actually getting hold of them is pot luck. In fact the last two times I managed, 6 months apart, it was the same person. When I asked if she was their only helpline employee, I merely got a dry laugh...

 

Edited January 9 by Hal Nail

[Bernard Lamb]

1 hour ago, Hal Nail said:

You are required to register.

 

You pay weekly class 2 NI from the date you start, as well as class 9 on the profits. After the first year they ask for payments on account for income tax as well rather than at the year end.

 

edit. agree with you on the end bit. whenever I've spoken to them they've generally been knowledgeable and even helpful but actually getting hold of them is pot luck. In fact the last two times I managed, 6 months apart, it was the same person. When I asked if she was their only helpline employee, I merely got a dry laugh...

 

Oh dear. I did say if you are working in a proper job and are also receiving income from self employment.

Which is what I understand will be the case for most of the people posting in this thread.

In over forty years I have never had to pay on account. I have always sent in the details for the last tax year around August and then had  a bill to pay in January.

Bernard

[Hal Nail]

20 minutes ago, Bernard Lamb said:

Oh dear. I did say if you are working in a proper job and are also receiving income from self employment.

Which is what I understand will be the case for most of the people posting in this thread.

 

Exactly my situation now although i was originally just self employed and it might be a carry over from then perhaps.

 

Anyway unless you are actually trading and owe tax, there is no benefit in doing this and you'd pay extra NI.

[Sjcm]

I see EBay have put a big article about "no side-hussle tax" on their home page. Seems a bit late seeing it came into law in January, so I wonder if there has been a significant drop off in sellers listing?

[Michael Hodgson]

2 hours ago, Sjcm said:

I see EBay have put a big article about "no side-hussle tax" on their home page. Seems a bit late seeing it came into law in January, so I wonder if there has been a significant drop off in sellers listing?

 

Perhap the most telling point they make is that you can get the official version from HMRC

https://www.gov.uk/check-additional-income-tax

 

If you can honestly answer the questions that asks and that says you don't need to tell the Revenue about your sales, you'd be on pretty solid legal ground even if they do come asking questions because ebay decided they were required to report you.

 

The taxman has never been that bothered about screwing the last halfpenny out of you - they've always been pragmatic and taken the line that any money they collect from individuals has to be worth the time and effort they have to put into collecting it, so as a general rule they're not interested in small beer.

[2E Sub Shed]

6 minutes ago, Michael Hodgson said:

The taxman has never been that bothered about screwing the last halfpenny out of you - they've always been pragmatic and taken the line that any money they collect from individuals has to be worth the time and effort they have to put into collecting it, so as a general rule they're not interested in small beer.

Once read of a case where a tax appeal hearing (i.e. Special Commissioners) took place in someone's living room due to the persons illness.

 

IR35 case 2004

 

[andyman7]

3 hours ago, Sjcm said:

I see EBay have put a big article about "no side-hussle tax" on their home page. Seems a bit late seeing it came into law in January, so I wonder if there has been a significant drop off in sellers listing?

It's because the rules will start being actively applied for the upcoming 2024-25 tax year

[Sjcm]

41 minutes ago, andyman7 said:

It's because the rules will start being actively applied for the upcoming 2024-25 tax year

Yes but technically if you were still selling in January over the limit your records will be shared.

[Sjcm]

1 hour ago, Michael Hodgson said:

 

Perhap the most telling point they make is that you can get the official version from HMRC

https://www.gov.uk/check-additional-income-tax

 

If you can honestly answer the questions that asks and that says you don't need to tell the Revenue about your sales, you'd be on pretty solid legal ground even if they do come asking questions because ebay decided they were required to report you.

 

The taxman has never been that bothered about screwing the last halfpenny out of you - they've always been pragmatic and taken the line that any money they collect from individuals has to be worth the time and effort they have to put into collecting it, so as a general rule they're not interested in small beer.

While I tend to agree (hope) that is the case, it's still incredibly vague with  the onus on you.  The 1700 sales figure for reporting your figures is fair enough though many  non professional sellers will be above that. The 30 items limit is ridiculous as that could easily be below 1700 or indeed 1000 pounds. Loads of railway hobbyists must go miles above 30 items in sales per year. With people like Martin lewis telling anyone to report over 1000 pounds worth of sales to HMRC  even if your just selling the contents of your loft then people will be put off. And the elephant in the room is if they are after the big fish avoiding tax, then what sort of idiot big fish will continue doing it?

[adb968008]

55 minutes ago, Sjcm said:

if your just selling the contents of your loft then people will be put off. And the elephant in the room is if they are after the big fish avoiding tax, then what sort of idiot big fish will continue doing it?

I imagine they dont want the idiot big fish to stop, but instead to formalize and declare it.

 

Everyone privately emptying their personal stuff they dont care about.

 

Of course the media likes to scare everyone.

 

i just walked through the options of that calculator, if under £6k of personal items you dont need to declare it. If over £6k of personal items but no profit you also dont need to declare it.

 

I personally find making a profit of model railways is a pipe dream, and if you do find 4 or 5 that do make a few quid, its more than offset by the 10-20 that make a loss, but then i’m not buying to make a profit in the first place, my problem is simply buying too much and shifting fashions.

 

 

Edited March 28 by adb968008

[andyman7]

11 minutes ago, adb968008 said:

 

 

I personally find making a profit of model railways is a pipe dream, and if you do find 4 or 5 that do make a few quid, its more than offset by the 10-20 that make a loss.

 

 

Absolutely. I've reached a point where I can offset a whole myriad of losses to a pretty good extent by careful sale of stuff I don't need or want through regular clearouts. I also try to get better prices when I sell things by ensuring that they are serviced and work properly. But as for a business, it's decidedly negative, which is why a need a real job (on which I pay very real taxes) to fund it all!

[Sjcm]

yep, but what's a personal item? if you bought say a loco off ebay next  month and Christmas you flog it on ebay because you don't like it, changed era's, etc.. then that isn't automatically classed as a personal item. Profit wise you could have bought a non-runner and fixed it, and got more than you paid. There is no time limit so if you sell over 1000 pounds in total the onus is on you to prove that it wasn't intentionally bought to sell if HMRC decided to look into it. Its all very vague

[adb968008]

39 minutes ago, Sjcm said:

yep, but what's a personal item? if you bought say a loco off ebay next  month and Christmas you flog it on ebay because you don't like it, changed era's, etc.. then that isn't automatically classed as a personal item. Profit wise you could have bought a non-runner and fixed it, and got more than you paid. There is no time limit so if you sell over 1000 pounds in total the onus is on you to prove that it wasn't intentionally bought to sell if HMRC decided to look into it. Its all very vague

Do you really think they care about a single £30 loco sold for £35 on its own, 1 sale in a year ?

i view this…

1 hour ago, adb968008 said:

Of course the media likes to scare everyone.

In context of scaring everyone away from selling, would lead to great advertising opportunities to earn revenue for media companies.

 

its not about “us”.

 

if your not doing this to intentionally make a profit then i don't think you need to be scared, and god forbid you do make a sizeable profit, then i’m sure you would know that you did.. so declare it.

 

Its not illegal to sell something, if I lost my job tomorrow, a whole bunch is going online immediately, if it makes a profit i’d have no issues declaring it, but having been in that spot 3 times before i’m quite confident that I wont at this stage in my life.

 

People have reasons to sell, moving home, job, getting married, kids, large bills, being bored looking at something, being frustrated with something not working, a new release being made, or a fault being found… none of these are crimes.

 

 

 

Edited March 28 by adb968008

[Sjcm]

They're not looking at the 35 pound loco, they're looking at the sales over 1700 pounds  or selling more than 30 items. They wouldn't be at the stage to look at whether  all the individuals items were legitimate selling of personal items or not from eBay flagging it up .Ebay cant tell HMRC where you got the item you're selling - that would be down to you😉

 

I don't think this was ever about catching the big fish who would have moved on or gone legit as soon as this was announced. Not sure it's about catching out  hobbyists selling off unwanted stock either. Imo, its more  about  getting people declaring any ebay sales over the limits to HMRC as a matter of course, rather than the fear of a letter from them querying your sales. - So yeah, if I was selling over a 1000 pounds per year on ebay, I'd tell them, profit or not.

[Blandford1969]

Interestingly ebay sent an email today on the subject of tax

 

There’s no new ‘side hustle tax’!

We want to give you peace of mind that there’s no new ‘side hustle tax’ or a change to existing tax rules for selling online.

In general, if you’re selling unwanted personal possessions, such as used clothes, an old mobile phone or unwanted furniture, it’s very unlikely you’ll have to pay income tax.

Selling personal items is not taxed if they’re sold for less than £6,000 and you’re not selling as part of a business.

So, you still won’t pay tax unless:

•

You are ‘trading’ or buying and selling multiple items to try and make a profit or run a business.

•

You sell an asset for more than £6,000 (the level where the capital gains tax may apply).

Check out these examples:

 

Grace, Manchester

Grace sells old clothes to make space in her wardrobe. Even if she sells a lot of her old or unwanted clothes, she isn’t trading and sells for less than she paid for them, so there is no tax.

Annual eBay income: £420

Annual eBay profit: £0

Taxes owed: £0

 

Ben, London

Ben sells his collection of trading cards for a profit. Even though he receives £18,000 and makes a profit of £2,900, he has a capital gains tax-free allowance, so there is no tax.

Annual eBay income: £18,000

Annual eBay profit: £2,900

Taxes owed: £0

 

Claire, Bristol

Claire sold her old furniture when she moved house. Some of the furniture was valuable, but always less than £6,000 per item, so there is no tax.

Annual eBay income: £4,000

Annual eBay profit: £0

Taxes owed: £0

 

 

 

[Hal Nail]

"Fred spends far too much time on eBay looking for bargains. He tells himself that those he regrets he can always sell on and since he's bought carefully, he'll probably make a profit"

 

Obviously this is hypothetical.