A bit of a Tax question

Ricochet J

Ricochet J

Ricochet J

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Joined
29 Jun 2004
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I've got a few hours a week off, which means I can persue a hobby of mine. It involves buying something and selling it for a higher price. However it will not be on a regular basis, prob around one or two sales a month if i'm lucky. I'm asking because i'm unsure and don't want to be commiting fraud by keeping quiet.

Thanks :)

P.s - i'll be doing this acivity with a friend if that matters.
 
jonno.co.uk said:
is the item you are selling second hand? if so then no tax is due (iirc).
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Que? So being an antiques dealer is a tax exempt profession? I think you may be getting confused with VAT.

Simplest answer based on the lack of information in the original post is that if your total earnings for the year (including this activity) are less than your personal allowance (£5,225 this year) then you don't need to pay tax on any of it but without more information it is difficult to say properly.
 
If you're selling antiques as a business then you will have to pay corporation tax or income tax. If you sell an antique as a one-off or only occaisionally then its a capital asset and subject to capital gains tax (potentially - theres a lot of allowances and annual exemption).
 
Once or twice a month?

That's trading, 90% for sure I'd say. You'll be subject to income tax on the profits.

A few questions:

1) What is it you're selling?
2) Are you selling it with the intention of making a profit?
3) Are you enhancing the asset prior to sale?
4) Will you be "enjoying" or making use of the asset between acquisition and sale?
5) How are you financing your purchases?

PS I'm a trainee tax adviser.
 
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vonhelmet said:
Once or twice a month?

That's trading, 90% for sure I'd say. You'll be subject to income tax on the profits.

A few questions:

1) What is it you're selling?
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I buy crap cars which are damaged. And as a hobby I end up fixing them. I have a friend who is a mechanic who helps me out, so it's kind of labour for free. Now, i've found out that the cars I have purchased are worth more than what I got them for after I have fixed them up! So, I was thinking of buying, reparing, selling. We repair in my friends shop/garage which is closed on weekends to customers but me and my friend use the facilities there and close the shop shutters behind us.

vonhelmet said:
2) Are you selling it with the intention of making a profit?
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It's more of a hobby, but yes, the intention of making a small profit.

vonhelmet said:
3) Are you enhancing the asset prior to sale?
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I think that's a yes as I buy them damaged and thinking of selling them undamaged.

vonhelmet said:
4) Will you be "enjoying" or making use of the asset between acquisition and sale?
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No, because I wouldn't be insured on the car. And neither would my mate meaning we wouldn't be legally allowed to drive it. The only joy we get is fixing the cars and learning more about them on the way of fixing them.

vonhelmet said:
5) How are you financing your purchases?
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It's all out of my own pocket. The money to buy the broken up car and it's parts are financed by my weekend job (which is taxed! :D )

vonhelmet said:
PS I'm a trainee tax adviser.
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Beautiful, is it a good job?


I hope that makes things a little clear for people and sorry for being vague. For a reason im not too sure about I was reluctant to give loads of information out. I must stress, so far, we haven't sold a single car yet. And if we do, it'll be about 1 car, maybe 2, per 1/2 months.
 
Capital gains tax. If you make over 7k odd (is that right, im not sure) then you have to report it on your tax return.

Just do what you would normally do, but make sure you fill a tax return at the end of the financial year.

Edit: Or just listen to the chap above as obviously he should know what he is on about, otherwise he will be looking for a new job soon :D
I used common sense, which probably doesn't hold water when it comes to taxi man.
 
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Based on what you've said, it's definitely trading. You'll need to report your profits and pay income tax on them. Keep some kind of records of income and expenses and calculate your profits, and then submit a self assessment return to HMRC. Their website should have the details of which expenses are deductible and which aren't, or you can find a tax adviser to help you out.
 
Goldy said:
Haha i bet you regret asking now. Just keep it on the down-low and you should be fine.
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Haha that's illegal and you're a moron for suggesting it.

Edit: Not least because the reason the OP asked was specifically because he didn't want to be doing anything illegal.
 
Technically he would be a moron for taking it seriously. And since when did a taxman give opinions?:p (rhertorical question)
 
Goldy said:
Technically he would be a moron for taking it seriously. And since when did a taxman give opinions?:p (rhertorical question)
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A moron for taking it seriously? Why do you say that? This is a simple situation. Consult the badges of trade, job done.

Not sure what you mean about the taxman and opinions either. For one thing, I'm not the taxman, for another I do give opinions. That's basically my job - legal opinion.
 
Eriedor said:
Hardly crime of the century is it though? No doubt many many people earn a bit of money on the side and don't declare it.
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That's not really the point. It doesn't make it any less illegal.

Besides, people get in trouble for discussing other illegal things on these boards, so why should tax evasion be any different?
 
You are a car trader - you must declare your earnings to the inland revenue and you are subject to tax on it. You must also not pose as a private seller when selling the cars, you must indicate you are trade. In the event of any faults with the car within 6 months the burden of proof lies with yourself.

Good luck.

Not entirely sure trading in dodgy used cars classes as a hobby.
 
[TW]Fox;11099221 said:
Not entirely sure trading in dodgy used cars classes as a hobby.
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Its a hobby. It started when I got gifted a Renault 5. I replaced the suspension and radiator, and hey presto, it worked! When I fix the cars I can't keep piling them up. They have to go.
 
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