None of this is new, there has been a £1000 turnover threshold on "hobby" sales before you need to self assess for years.
https://www.gosimpletax.com/blog/when-hobby-become-a-business-for-tax/
If it’s people selling 2nd hand goods it’s taxable as capital gains not income and more probably in reality a capital loss (no your old bike is not worth more than you paid for it) which will offset against other gains and generate a negative tax take for HMRC.
Generally of course such sales are exempt (for this very reason!) though this may not mean that they don’t need reported.
if you’re buying and selling as a trader of course that’s different.
I presume the "profit" isn't on a "per item" basis. So you might make, say £1000 profit on selling item X on eBay but if you made a lose of £1000 on item Y on Facebook, then you haven't made a profit - ergo, no additional tax.
So any data feed from a single platform like eBay by itself isn't gonna tell the whole story
I foresee a lot of people making fake sales with a paper loss which wipes out any profits...
It's gonna be a nightmare for HMRC as it's sooooo easy to circumvent
So 8 can sell loads of old bike stuff as a capital gains loss, can I offset that against any capital gains I might be due if I sell some shares?
So 8 can sell loads of old bike stuff as a capital gains loss, can I offset that against any capital gains I might be due if I sell some shares?
No, because things that lose value because you've used them are classed differently. Just like you can't offset the rising value of your 2nd home against the depreciation of your Range Rover.
Otherwise we'd all be offsetting the weekly food shop against our tax bill, as like some of my shares right now it all goes to shit over the course of a week.
I foresee a lot of people making fake sales with a paper loss which wipes out any profits…
It’s gonna be a nightmare for HMRC as it’s sooooo easy to circumvent
Well if you tried that on any meaningful scale it would be false accounting and cost you a bit more than 20% of the profits .......
I've pointed this out a couple of times on here over the last year and generally been ignored or poo poo'd
The bottom line is very simple. Many many more people will be dragged into self-assessment through this who really shouldn't be. Many many of these, I'd say the vast majority will probably owe no or vanishingly small amounts of tax but the onus will be on them to prove it. - even if they can they will still get fined if they don't complete the relevant forms correctly and by the right deadline.
Its basically another tax on their time and energy in a world where billionaires and shareholders in big corporations ride roughshod over us all laughing as they go whilst failing to pay even a tiny percentage of tax owed and trousering massive profits
It stinks.
I foresee a big increase in Facebook Marketplace and cash-in-hand use!
@vlad it’s a digital sales act, the names I saw mentioned where eBay Vinted Depop Airbnb just eat uber eat Etsy
no mention of PayPal, Amazon and or facebook
facebook will get away with it as it doesn’t have a payment function
I'm surprised PayPal haven’t been pulled into the same reporting requirements .
Although a quick google hmrc have had access to PayPal for the last 8 years and they can access bank accounts of uk taxpayers without authorisation. But that implies they are reviewing information when investigating the individual as opposed receiving info that mrZ has received £xxxx in the calendar year
It’s income, pure and simple.
If I sell something for less than I bought it for, then it is a loss, if I am taxed on profits from private sales of second hand goods, do I also get to claim losses against my taxable income? I am selling an ebike at the moment, I will lose around 3k on a 5k bike when new, I wouldn't mind claiming that 3k loss against my tax, I assume the rules work both ways yes? If I can't sell it, can I write the whole 5k off?
Also interested if I can offset losses. Thinking about bike to work there are fair market value guidelines that let you work out the rough value based on purchase price and age (I think).
the onus will be on them to prove it
When did "guilty until proven innocent" become a thing in English law?
As above the law around what makes buying and selling things taxable hasn’t changed.
All that’s happening is hmrc has data on habitual sellers. Some may be carrying on a business.
Ask yourself why you bought the item in the first place. If it was bought to sell you are a trader and should declare income. If you bought for personal use and just selling on then its not a trade.
The vast majority of second hand items sold on eBay are sold at a loss - if selling these items were a trade/business the seller would be able to claim tax relief and get money back …. HMRC obviously has no interest in arguing selling private goods is a taxable .
There's a lot of misinformation on here (and in the press to be fair).
https://www.gov.uk/guidance/selling-goods-or-services-on-a-digital-platform
Is what you actually need to read as a starter.
Also Google "badges of trade". HMRC's internal manual pages on this are freely available.
As some have mentioned on here - this is an effort to crack down on people effectively running an undeclared small business.
Anyone that actually believes there is a reality where HMRC are going to come to investiate you unless you are clearly a trader in terms of the amount of money and duration of activity lives in a fantasy - They don't have time to investigate obviously fraudulent business (such as covid loan fraud) let alone someone selling over the threshold on ebay.
Personally, I sell some second hand personal stuff, sell some old business stuff (the horror!)- goes well over the threshold, have done for years and will continue to do so without a single care in the world.
For many, buying and selling or a little 'side hustle' (hate that term but it is well know) is their way to take their standard of living from existence to allowing for some of lifes 'luxuries', like an occasional holiday and some new tyres for the car.
I know a teacher that tutors on the weekend, cash in hand, an electrician who will work on a sunday, cash in hand, a swimming instuctor that works, cash in hand, car detailer that works, cash in hand - need I go on?
Until the goverment of the day, HMRC etc crack down on 'tax efficiency' and downright evasion to the tune of hundreds of millions practiced by the super rich and corporations of this world, quite frankly I couldn't give one shit about the average member of society earning a few quid tax free to gain a marginal improvement to their standard of living.
It really isnt that onerous to keep a simple record for any items sold and the postage/fee costs involved in a spreadsheet somewhere. You can then see if you need to do a self assessment return and if the "badges of trade" criteria apply to any sales. It then doesnt take too long to do a return online.
It doesn't take long if you know what you are doing, I'm not thick and have been doing Self assessments for 10 years now and I still find it overly complicated and sometimes hard to know what to put in what box, all the while with the worry that if I do something wrong I'll get slapped with a fine or a giant tax bill.
There will be many people who have never done a SA before, won't even know what one is or when it needs to be done by that could be caught by this.
And, keeping all the reciepts for stuff you might sell on once you've used them is going to be a pita. If its just one bike maybe not, however if you like building your own bike like I do, out of a mixture of new and second hand bargains its going to be a pain
It might not be 'onerous' but why would I want to do so if it ultimately results in an additional tax bill for myself or others doing so when I / we just don't need to?
Lets hope letters go out to all of those teachers and music tutors earning a few quid tax free on a weekend too eh, tut tut.
It doesn't matter if 5000 new compliance staff are hired, nobody is coming to my house to question me about some ebay sales unless they are significant and obvious business trading, in the same way nobody is going to visit the huge number of trade's people to see if they are declaring cash payments.
Knowing quite a few self employed people (also myself) - between us we have had 2 visits from HMRC, both for VAT, both times due to large re-payments which obviously flags as an issue, not one single other person or business has ever heard so much of a peep from them.
They don't have time to go after real fraudsters, let alone knock on the door of someone selling hand knitted scarfs and hats on etsy or running a 'business' buying a few used bikes and selling the bits on.
Ill be honest, this thread seems to attract a small number of people that just don't think the same way as the rest of society 'bobble hats' if you will.
It's not that hard - if it looks like it's being done to make money, and theres a pattern of activity, then it's a business and you should be paying tax on the profits.
You can buy and sell bikes for personal use. It's going to be pretty rare that you sell one for more than you paid for it. But if you manage to do that regularly, then it's probably a business.
There are clearly some people on eBay who buy up either poorly listed/displayed bike parts, or who buy complete bikes and break them to sell as parts. Thats a business.
My Missus is fretting over this, her and her Mum like a charity shop or car boot browse for a weird mixture of clothes, antiques and tea sets, these things end up cluttering the house and gradually make their way onto eBay.
She's almost certainly above that 30 items/£1700 in sales threshold, what she has bugger all idea of is ow much actual "profit" they make (their expenditure is not monitored/accounted for), I suspect if you looked at their disorganised hobby as a business it probably doesn't break even (I get to live in amongst piles of their unsold "stock". but as the owed tax is just going to be judged off of the years sales total (plucked from eBay?) she'll just end up owing a couple of hundred quid. The problem is persuading her to do the online assessment.
I already have to do it because of child benefit and pay thresholds and just find it an annual annoyance, but that .gov website is going to drive her utterly mental I reckon. Trouble is once you're on their radar they want you to do a self assessment every year...
It does be the question as to how much effort this requires and revenue it creates for HMRC in comparison to going after large scale tax-avoidance.
Yeah, kinda, my missus is probably a typical example, a PAYE pleb that (probably) owes a wee bit of extra tax due to a hobby/side gig, It's low hanging fruit and doesn't need a lot of HMRC personnel, it's all assessed, calculated and paid online.
The UK's major Tax dodgers are corporations and Big "earners" who will pay accountants to help them be "efficient" the cumulative effect of chasing eBayers and Etsy users might be a few million quid, those top 5%ers are probably sat on substantially more ill gotten gains, but the effort to get at it will be exponentially more as well...
in a world where billionaires and shareholders in big corporations ride roughshod over us all laughing
Like eBay. People have been buying via ebay because it's cheaper than buying from someone with their own shop and/or website... partly because ebay have been helping people avoid taxes to sell cheaper. Now, what about all the small businesses paying rates and all their other taxes... while ebay laughs all the way to San Jose? Mandating online marketplaces to supply data to HRMC is closing this down. They are now changing how (real) private sellers are charged and operate, and moving people to sell as businesses where that is what they are... they wouldn't have changed any of this if they hadn't faced new regulations... they'd have kept turning a blind eye, and kept pocketing the fees for people to run their businesses as if they weren't to avoid tax.
It doesn’t matter if 5000 new compliance staff are hired, nobody is coming to my house to question me about some ebay sales unless they are significant and obvious business trading, in the same way nobody is going to visit the huge number of trade’s people to see if they are declaring cash payments.
Don't worry, HMRC staff have 72 hours to report any information about suspect activity they hear about, so they'll be with you shortly. (Wink emoji)
More seriously, of course risks are prioritised on a cost/benefit basis.
do I also get to claim losses against my taxable income? I am selling an ebike at the moment, I will lose around 3k on a 5k bike when new, I wouldn’t mind claiming that 3k loss against my tax
Hmmm. That does sound onerous. Just out of interest, why did you buy an ebike for £5k with the intention of selling it on for only two grand?
Jesus Christ - you are going to try and persuade your partner and mum to do a self assessment and actually pay a token fabricated amount to HMRC because they may have gone over the dreaded threshold, even though you have no idea if they made a profit or not? - That is beyond silly.
Ebay sellers absolutely cannot have their tax owed (if any) 'calculated online' all Ebay / HMRC know is the value of items sold, not their cost or the cost of sales associated with selling that item - are you sure you should be filling out your own self assessment without guidance?
People in this thread need to come back into reality, seriously.
If you're buying to sell, and take more than £1000, that's self assessment territory. Has been since... er... ever? Same for tuition or any cash in hand work. Plenty of people do a bit of work on the side without taking that much, so none of this applies to them. Be that teaching maths at the weekend on the run up to GCSEs, buying Barbie dolls from charity shops to clean sell on, or whatever... none of it needs to be declared up to £1000... beyond that, yes, time to inform HMRC.
There will be many people who have never done a SA before, won’t even know what one is or when it needs to be done by that could be caught by this.
Completely agree and HMRC have appaling form for fining people for missing the deadline when they dont even earn enough to pay any tax:
In the last few years, HMRC charged 420,000 people with £100 late filing penalties when they earned too little to pay tax. People earning under £6k received twice as many penalties as people earning more than £83k.
Source: https://taxpolicy.org.uk/2024/10/29/how-to-reform-hmrc-penalties-for-people-on-low-incomes/
If you're selling some personal 2nd hand stuff there is no tax due at all. You don't have to keep receipts for things you buy, just in case you later off-load them half price (if you're lucky).
If you're buying stuff to sell at a profit, and doing enough of it for it to be considered a side-hustle/business, then you need to keep better records.
If you have valuable possessions and sell them at a loss, you may be able to offset this against other capital gains, but it only applies to things well into 4 figures in value (and specifically excludes cars). Some bicycles could conceivably fall into this category...but note that the calculation is based on a minimum sale price of 6000 UKP so you can never claim any loss on anything that didn't cost more than this.
Edit: sorry in order to claim a loss it also has to not be a "wasting asset" ie an expected lifetime of 50y or less. So possibly including an antique bicycle that has historical value as a collectors' item, but not your latest 12k unobtanium gnarpoon.
Kelvin - It might be self assessment territory, but hardly anyone declares the income , even if they are over. A funny memory is one of my teachers around 20 years ago telling the class he did some tutoring work at weekends and didn't inform HMRC...
Andy - These are people that are registered as self employed and forgetting to file / choosing not to, the fine is for failing to file on time, the amount owed is irrelevant - not random people selling on Ebay - you absolutely will not be getting fined for selling over the threshold online and not submitting a return, unless you have info to suggest this being the case?
Again keep in mind they cannot know you are making a profit or are trading or any such activity unless you file a return in the first place to inform them as such and selling an item online doesn't automatically enroll someone into needing to do so, regardless of the sales value.
Meanwhile ebay UK themselves in 2021 (last numbers on Co House) made £1,400 million in revenue but only declared £37 million profit and paid £7 million in tax.....
I know the bosses of Ebay aren't on Singletrack worrying about declaring a self assessment for the stuff their mum flogs from the charity shop that's for sure.
you absolutely will not be getting fined for selling over the threshold online and not submitting a return, unless you have info to suggest this being the case?
I dont have any info, HMRC require a tax return if turnover from selling is >£1k. Ebay will start to report to HMRC any user with Sales > £1.76k I am assuming at some point HMRC will compare and ask people who historically had ebay sales > £1k why they havent been doing a tax return?
Interesting, I wonder how HMRC would have dealt with me selling off about £12k of my deceased friends worldly goods through ebay in 2023. Or how they'll deal with me selling off my stuff as I prepare to move house. Having said that the onerous new conditions on purchasing, effectively hiding their fees from users by charging buyers a few has put me right off - just trying to clear stuff before 4th Feb...
Andy - |You only need to file a return if you sell over £1000 and the things you sell have been purchased in order to make a profit or if you fall foul of capital gains tax due to value.
They are absolutely not going to question people as to why they have not filed a return because they have sold more than £1000 on ebay in a year several times before you are living in a fantasy land, seriously.
Ignore me - Crankrider has answered above!
You could sell literally everything you own, and it’s not a business. Buy lots of things to try and sell at a markup, and it is.
Jesus Christ cookeaa– you are going to try and persuade your partner and mum to do a self assessment and actually pay a token fabricated amount to HMRC because they may have gone over the dreaded threshold, even though you have no idea if they made a profit or not? – That is beyond silly.
Meh, isn't there a fine for late/non-submission?
Plus if eBay have "grassed" on her because of their simple sales volume/value threshold, she kind of has to do it right? I'm not compelling anything,
For the sake of a frustrating evening online, and a couple of hundred quid I'd rather she squares it away TBH... It'll maybe persuade her to either keep better track of profits/loss and turn a hobby into a job, or knock the whole thing on the head.
Meh, isn’t there a fine for late/non-submission?
There is, and it is an ongoing fine that goes up as it gets later
Cookeaa - How on earth could you be fined for late submission of a return that you are not expected to make, unless your partner / mum is already registered as self employed and already actively partakes in the buying and selling of goods from charity shops for the purchase of making a profit of course?
Where do you get the figure of 'a couple of hundred pounds from'? - Is this something you have plucked out of thin air? Do you have any experience with expensing a 'business' in order to come to this figure, aspects such as personal use of phone, storage, travel to and from the shops in order to buy the items etc? - Filling a bullshit tax return out just so you can pay some money is bonkers.
If you do, in some fantastical universe, receive a letter asking if you should have filed a tax return based on the fact you sold a piffling sub £2k amount on ebay from HMRC you still don't need to file a return if you aren't required to do so -Self Assessment tax returns: Who must send a tax return - GOV.UK
Punishing your partner into making a tax return in this situation in order to force her into being more organised is bizarre, but then many people on this thread are - I can see half of the people here submitting a tax return in blind panic soon because they sold their 5 year old bike on Ebay and breached the threshold.
did the ops family friend register a new ebay account in 2024,
if not they've got a "get out of jail card, dont collect £50 on passing go"
did anyone read this article, Selling online & HMRC | UK Seller Centre
i've posted the important bit below and the sentence is Highlighted in BOLD.
---------------
Do I have to share information with HMRC?
From January 2024, new UK digital sales reporting rules require digital platforms like eBay to share information with them. However, this reporting doesn’t change your tax obligations.
On eBay, this should only affect newly registered accounts in 2024, which will extend to all accounts in 2025.
eBay will only report if you pass certain yearly sales thresholds:
- If your total sales on eBay exceed €2000, or roughly £1740, after fees.
- If you complete 30 or more sales transactions on eBay.
In general, selling personal items is not taxed if they’re below £6,000 and you’re not selling as part of a business.
---------------------
did the ops family friend register a new ebay account in 2024,
if not they’ve got a “get out of jail card, dont collect £50 on passing go”
Not my area of specialism but I'm pretty sure that's referring to eBay passing info to HMRC.
The requirement to pay tax if you're making money online trading has always been there, hence:
However, this reporting doesn’t change your tax obligations.
There seems to be a basic confusion here in many posts: eBay reporting something to HMRC does not make anyone liable for tax and *DOES NOT EVEN MEAN THEY HAVE TO DO A TAX RETURN AND DECLARE IT*
If HMRC wants you to do a tax return that's for them to ask, but there's no earthly reason why they would want to for someone selling assorted 2nd hand goods that yield 1k or so in cash.
Plus if eBay have “grassed” on her because of their simple sales volume/value threshold, she kind of has to do it right?
No! You don't have to do anything (pay more tax, complete a self-assessment, declare yourself a sovereign citizen) just because eBay passed transaction information to HMRC. That's why all the Chicken Licken comments have not been taken seriously.
The HMRC Badges of Trade are criteria used by HM Revenue and Customs (HMRC) in the UK to determine whether an activity constitutes a trade, which would make any profits from that activity subject to income tax or corporation tax. These “badges” are guidelines derived from case law to assess whether an individual or business is trading or engaging in a hobby or investment activity.
Here are the 9 HMRC Badges of Trade:
1. Profit Motive
• Is the activity carried out with the intention of making a profit? A clear profit motive indicates trading.
2. Frequency or Number of Transactions
• Repeated or frequent transactions suggest trading, whereas one-off sales are less likely to be considered trade.
3. Nature of the Asset
• If the asset is one typically associated with trading stock (e.g., goods sold in a shop), this suggests trade. Assets held as investments (e.g., property or shares) might not.
4. Existence of Similar Transactions
• Engaging in similar transactions, even in the past, could indicate trade, especially if a pattern of buying and selling emerges.
5. Changes to the Asset
• If an asset is improved, repaired, or modified to make it more marketable, it suggests the intention to trade.
6. How the Asset was Acquired
• If the asset was purchased with the intention to sell (rather than for personal use or enjoyment), this supports the case for trade.
7. The Method of Sale
• Selling goods in a manner typical of a business (e.g., through advertising or a commercial platform) is a strong indicator of trading.
8. Source of Finance
• If the purchase of an asset was financed by borrowing that relies on the sale of the asset to repay, this indicates trade.
9. Interval of Time Between Purchase and Sale
• A short time between buying and selling an asset may indicate trading, while holding an asset for a longer period suggests investment.
Additional Notes
• Not all badges need to apply for HMRC to classify an activity as trading. Instead, they are considered collectively.
• These badges apply to a variety of activities, including property sales, online trading (e.g., eBay), and side hustles.
• If an activity is deemed to be trading, individuals or companies must declare their income and pay the appropriate taxes.
If you’re unsure whether your activities might constitute a trade, you may want to seek professional advice or contact HMRC directly.
If HMRC wants you to do a tax return that’s for them to ask, but there’s no earthly reason why they would want to for someone selling assorted 2nd hand goods that yield 1k or so in cash.
mostly right - but if HMRC think you should have told them about income or registered for a self assessment because of that income - then “you didn’t ask me too” is not a defence.
