Ebay and All online traders rule change

[Paddy]

Sorry if this is old news to most of you, but I only learnt about it today from a friend, who is a legitimate Ebay trader. Apparently the Ebay sellers' forums are all agog with this.

Ebay, Amazon, Etsy and all online selling platforms operating in the UK are now required to provide details to the HMRC of the registered user's address, bank details and trading summaries. The HMRC will use this to send tax demands to anyone who has made more than £1000 profit in any given year and has not already registered to pay tax on this profit. They are expected to go back over the last 5 years or more. The expectation is that many well known sellers will be hit with huge bills and face criminal proceedings if they do not pay. Some are already running for the hills!

 

[Bronze & Copper Collector]

2 minutes ago, Paddy said:

Sorry if this is old news to most of you, but I only learnt about it today from a friend, who is a legitimate Ebay trader. Apparently the Ebay sellers' forums are all agog with this.

Ebay, Amazon, Etsy and all online selling platforms operating in the UK are now required to provide details to the HMRC of the registered user's address, bank details and trading summaries. The HMRC will use this to send tax demands to anyone who has made more than £1000 profit in any given year and has not already registered to pay tax on this profit. They are expected to go back over the last 5 years or more. The expectation is that many well known sellers will be hit with huge bills and face criminal proceedings if they do not pay. Some are already running for the hills!

 

The US has started that last year.... Vastly changed the reporting parameters.

[Coinery]

How do they determine what is £1000 profit?

Also, where does the person stand who buys a lot of say 5 coins, just for a single coin he/she wants, and wishes to dispose of the others? That would be a huge pain having to complete tax forms for that!

And what about regularly selling your old clothes, etc., imagine having to prove what’s profit, without keeping every receipt for every item you ever buy?

Plus, they say £1000 profit, but if you’re having to be accountable like a business, then a room in your house, the electric and heating, data use, computers, books bought, fuel and motor expenses, etc., etc., all have to be taken into account!

Edited January 11, 2024 by Coinery

[Martinminerva]

46 minutes ago, Coinery said:

How do they determine what is £1000 profit?

https://www.moneysavingexpert.com/news/2024/01/online-platforms-etsy-vinted-airbnb-report-hmrc/

Have a read of this, and should answer most questions. The key seems to be whether you are trading (buying to sell on) or selling your own stuff - but god only knows how HMRC can determine that. As ever, the establishment would appear to be going after the little people for every penny of tax and ignore the rich and the multi-billion conglomerates who allegedly have clever accountants to avoid/evade tax left, right and centre! 😉

 

 

Edited January 11, 2024 by Martinminerva

[Coinery]

29 minutes ago, Martinminerva said:

https://www.moneysavingexpert.com/news/2024/01/online-platforms-etsy-vinted-airbnb-report-hmrc/

Have a read of this, and should answer most questions. The key seems to be whether you are trading (buying to sell on) or selling your own stuff - but god only knows how HMRC can determine that. As ever, the establishment go after the little people for every penny of tax and ignore the multi-billion conglomerates who avoid/evade tax left, right and centre!

 

Thanks very much, an interesting read, much appreciated!

My only confusion is with the ‘trading allowance’…when they say ‘earn’ £1000, do they mean profit or gross sales? Because £1000 worth of sales could generate £50 or £900 of profit?

“If the total amount you earn via a platform in a tax year is £1,000 OR LESS, you probably don't need to tell HMRC or pay any extra tax

This is because you're likely covered by what's known as the 'trading allowance'. This entitles you to earn up to £1,000 tax-free without having to report the income to HMRC or pay any income tax on it.”

[Martinminerva]

2 minutes ago, Coinery said:

My only confusion is with the ‘trading allowance’…when they say ‘earn’ £1000, do they mean profit or gross sales? Because £1000 worth of sales could generate £50 or £900 of profit?

A very good point. As far as I understand, a turnover or gross sale of £1000 could generate a tax return obligation on you (if HMRC choose to send you one), but within which you would then declare your profits and pay tax as appropriate, so if you have made less than £1000 profit, you would not be liable for any tax. But I am not an accountant, so I may well be completely wrong! Any members on here suitably qualified to comment?!

[Coinery]

So would you have to go through the entire rigmarole of setting up as a sole trader and paying stamp duty, etc., just for flipping a few coins, or can you just submit a self-assessment at the end of the year, declaring you’ve profited, say, £3000 extra to your PAYE earnings?

I went sole trader before and it was a nightmare of paperwork for the small supplementary income.

[Martinminerva]

Now you've gone way beyond my level of understanding!! I hope the latter, but have no actual idea! Hope someone on here can provide professional clarity!

 

[SilverAge3]

On 1/11/2024 at 11:38 AM, Bronze & Copper Collector said:

The US has started that last year.... Vastly changed the reporting parameters.

The new threshold is set to be $600, combined accumulation across all platforms, and all money services like Cash App, Paypal, etc. What was it previously, $40,000, ir something wildly different? 

Edited January 13, 2024 by SilverAge3

[SilverAge3]

On 1/11/2024 at 1:16 PM, Coinery said:

My only confusion is with the ‘trading allowance’…when they say ‘earn’ £1000, do they mean profit or gross sales? Because £1000 worth of sales could generate £50 or £900 of profit?

Over here we have to prove it's profit, or it's assumed 100% to be profit. If you don't have receipts/invoices to prove what you paid into it, it will go on gross.  It also makes a headache just to say, get reimbursed for a loan, if you are repaid by some digital payment app..

[Coinery]

14 minutes ago, SilverAge3 said:

Over here we have to prove it's profit, or it's assumed 100% to be profit. If you don't have receipts/invoices to prove what you paid into it, it will go on gross.  It also makes a headache just to say, get reimbursed for a loan, if you are repaid by some digital payment app..

The thumbscrew is tightening upon those who can least afford a fancy accountant!