Hmrc - ebay/airbnb/vinted etc new rules - 1st Jan 2024

[Hades]

I’ve done mine last night! Funny how simple it is, in my mind it’s this mammoth task but since I keep my income through a separate account it’s quite straight forward. I don’t know why I put it off to the last minute lol

While the deadline is end of Jan I always try to get mine done by end of Dec because after that date they can't take any money you owe through your tax code.

Same as you I always think it's going to be a PITA but it's always easier than I expect.

 

[tttt]

I would say they would consider your intent is to trade, you just don't know specifically which items your buying will be to trade on and which are for your benefit.
Bear in mind your only going to be taxed on profits. So if you imported £10k of used CDs and then sold £9k worth which you can fairly say cost £9k there is no tax due. Just some minor reporting of purchase and sale.

Do you have any method of showing how much you bought stuff for and when?

Also, if you do go over the £1k in sales and just fill in a tax return declaring no profit then HMRC simply don't have the manpower to investigate every single person, the chances of you being investigated in the first place is infinitesimally small.

They'll have an automated system set up to send letters out to people over the £1k who make no attempt to fill in a tax return and may even try fining people based off the number eBay give them, but if you fill one in and declare no profit (for whatever legitimate reason), I very much doubt they will send the boys round.

If they think you are trading they would still have to have some sort of proof beyond just "he's sold a few cd's on eBay". If your description of the situation is accurate then I assume your not actually making a profit on the bad ones you sell on either so there wouldn't be anything to tax.

The rule used to be simply that if you aren't "trading" with the intent to make a profit then you don't need to fill in a tax return. The new rule appears to be that if you do over £1k on eBay then you do have to fill in a tax return and just mark it zero profit.

Thanks for pointing this out!

 

[tttt]

This is what almost every news outlet is reporting. And it clearly says "from 1st Jan 2024".

I suspect if they saw 800 quid in sales between now and April and they were diligent they'd check the rest of the tax year.

If that's the case, how would HMRC be able to get that data? Can they just go to eBay and ask data from a date before Jan 1 for a given person?

 

[tttt]

Possible. However, I'm not sure where that falls in the organisation's obligations to collect and report and/or whether they would bother. ebay don't give a **** about what the UK tax man gets. Working out who has a lot of sales between now and April and then going back through all those accounts of their own volition to find a pattern is just loads of extra work for them.

They will all no doubt do the bare minimum of what is required of them by law.

Also,as others say, I've only seen mention of collecting from Jan 24 to report to HMRC in Jan 25. The fact that this doesn't really align with the tax year also makes me think they're only using the data as a starting point to try and spot traders to go after, rather than specifically align your sales data to a reporting period etc.

It probably wouldn't happen. I suspect it would only happen if there was automation set up.

Ie "if sold items > 800 between 1st Jan and 4th April = human check"

It would certainly have to be automated. No ones gonna trawl through that.

But they'll have to do the same automation to report in 2025. Plus, I think the >30 sales || >EUR2000 is for the calendar year - at least that's what it sounds like eBay is going to do: "eBay will report this information should you meet either of the following thresholds within the calendar year" ( https://www.ebay.co.uk/help/account/regulatory/sales-reporting/uk-digital-sales-reporting?id=5454 ).


Also, eBay does have the data from before Jan 1, 2024. It would probably cost them 0 extra effort to include that data (just change the filter value to Jan 1, 2023) in January 2025's report. The gov't could give their interpretation of what "from Jan 1, 2024" means and eBay could just say "eff it, I don't wanna argue, just give 'em data from Jan 2023".

Another thing: eBay's committed to reporting by calendar year, and in Jan 2025, they'll submit data starting from Jan 1 2024: "Starting January 2025, eBay will begin annually reporting to HMRC. Each January we will report for the previous year". However, from my convo with HMRC, it seems like whenever someone's reporting in January, they're expected to report for the previous tax year. Reporting period for a tax year is from April 5 to January next year (or is it December?). So that's another confusing thing: eBay says clearly they're reporting by calendar year, whereas HMRC reporting rules are by tax year. What's up? Is Ebay misunderstanding how it works and will they change their reporting methodology?

 

[tttt]

As you're not anywhere near breaching your £1000 trading allowance, unless you'll trigger the 30 sales / €2000 platform reporting threshold, then I wouldn't be doing anything.

I wonder: what if there's 31 items sold, but the total amount traded including shipping and what-not is still under 1000 - will that require a self-assessment?

 

[Pudney]

I haven’t really read this thread but I did see a reference that £10k sales and £9k costs would mean no tax is due. This is incorrect unless a person’s Personal Allowance is still available.

The £1k trading allowance is either set off against gross income OR not available if actual costs are claimed. You don’t get both. So £10k sales and £9k costs would still give taxable income.

Back to tax return reviewing .

 

[Jono8]

But they'll have to do the same automation to report in 2025. Plus, I think the >30 sales || >EUR2000 is for the calendar year - at least that's what it sounds like eBay is going to do: "eBay will report this information should you meet either of the following thresholds within the calendar year" ( https://www.ebay.co.uk/help/account/regulatory/sales-reporting/uk-digital-sales-reporting?id=5454 ).


Also, eBay does have the data from before Jan 1, 2024. It would probably cost them 0 extra effort to include that data (just change the filter value to Jan 1, 2023) in January 2025's report. The gov't could give their interpretation of what "from Jan 1, 2024" means and eBay could just say "eff it, I don't wanna argue, just give 'em data from Jan 2023".

Another thing: eBay's committed to reporting by calendar year, and in Jan 2025, they'll submit data starting from Jan 1 2024: "Starting January 2025, eBay will begin annually reporting to HMRC. Each January we will report for the previous year". However, from my convo with HMRC, it seems like whenever someone's reporting in January, they're expected to report for the previous tax year. Reporting period for a tax year is from April 5 to January next year (or is it December?). So that's another confusing thing: eBay says clearly they're reporting by calendar year, whereas HMRC reporting rules are by tax year. What's up? Is Ebay misunderstanding how it works and will they change their reporting methodology?

I think this is overthinking it. It's clear that collecting starts Jan 2024 and reporting starts 2025.

In fact, your link says:

"Reporting to HMRC
Starting January 2025, eBay will begin annually reporting to HMRC. Each January we will report for the previous year and provide a copy of the reported data for your review. "

So they have explicitly said that they will report from Jan 25 and it will be the previous calender year...

I highly doubt any of these marketplaces will be doing anything else but that.

 

[Mercenary Keyboard Warrior]

I haven’t really read this thread but I did see a reference that £10k sales and £9k costs would mean no tax is due. This is incorrect unless a person’s Personal Allowance is still available.

The £1k trading allowance is either set off against gross income OR not available if actual costs are claimed. You don’t get both. So £10k sales and £9k costs would still give taxable income.

Back to tax return reviewing .

He says hes not making any profit so it would be £9k sales and £9k costs.

£10k purchases, of which £1k is for personal use.
£9k resales where profit = £0

 

[Kenai]

I wonder: what if there's 31 items sold, but the total amount traded including shipping and what-not is still under 1000 - will that require a self-assessment?

It will require eBay to report to HMRC and for you to make a judgement as to whether you need to complete a self assessment, which under £1000 you don't necessarily need to do but may well be more sensible on your behalf if you are in fact attempting to run a small scale business of some sort.

The onus is still on the individual to identify and submit the appropriate tax returns, as it always has been, what eBay etc. now send across is to help HMRC spot and 'remind' people that aren't submitting things when they perhaps should be.

 

[Jono8]

It will require eBay to report to HMRC and for you to make a judgement as to whether you need to complete a self assessment, which under £1000 you don't necessarily need to do but may well be more sensible on your behalf if you are in fact attempting to run a small scale business of some sort.

The onus is still on the individual to identify and submit the appropriate tax returns, as it always has been, what eBay etc. now send across is to help HMRC spot and 'remind' people that aren't submitting things when they perhaps should be.

Yeh. Nothing has changed tax wise. This reporting just helps the HMRC catch potential offenders.

I imagine it is also a pretty large deterrent to stop people regularly trading as private sellers on ebay. Any person that is regularly selling over 30 items/£1700's worth of stuff year after year, likely is trading. However, they still might not be earning more than £1000 in gross income, so could presumably declare that and say they don't need to file for self assessment.

 

[413x]

Yeh. Nothing has changed tax wise. This reporting just helps the HMRC catch potential offenders.

I imagine it is also a pretty large deterrent to stop people regularly trading as private sellers on ebay. Any person that is regularly selling over 30 items year/£1700's worth of stuff year after year, likely is trading.

Its worked on me! I didn't even pay attention to how much I was selling on the past!
And I probably would have carried on!
Now i know I need to be careful and keep under 1k.

 

[Kenai]

Yeh. Nothing has changed tax wise. This reporting just helps the HMRC catch potential offenders.

I imagine it is also a pretty large deterrent to stop people regularly trading as private sellers on ebay. Any person that is regularly selling over 30 items year/£1700's worth of stuff year after year, likely is trading.

Quite how honest they're being I don't know but across various social media it has surprised me just how many people don't realise that running a 'side hustle' that generates income, is in fact running an income generating business as far as tax is concerned and it isn't tax free just because you consider making trinkets to sell on Etsy a 'hobby'.

 

[Jono8]

I haven’t really read this thread but I did see a reference that £10k sales and £9k costs would mean no tax is due. This is incorrect unless a person’s Personal Allowance is still available.

The £1k trading allowance is either set off against gross income OR not available if actual costs are claimed. You don’t get both. So £10k sales and £9k costs would still give taxable income.

Back to tax return reviewing .

I thought gross income was the income AFTER product costs:

Net vs Gross Income | London and Zurich

Net Income and Gross Income - what's the difference? Find out in this article and use our formulae to calculate both for your business.

www.londonandzurich.co.uk

"What is Gross Income?​

Gross income is the total amount of income that your business has gained over a set time period, with only the cost of goods sold (COGS) subtracted.

COGS are the total cost of all the things directly related to providing the goods and/or services sold by your business. For example, the cost of manufacturing, packaging, logistics, and salaries of factory employees would all be included in COGS. But indirect costs such as marketing expenses would be excluded.

This is the formula you can use to calculate Gross Income:

Gross Income = Gross Revenue – COGS"



So if you bought £9000 worth of goods and only sold them for £10000, you have only made £1000 gross income no?

 

[Jono8]

Quite how honest they're being I don't know but across various social media it has surprised me just how many people don't realise that running a 'side hustle' that generates income, is in fact running an income generating business as far as tax is concerned and it isn't tax free just because you consider making trinkets to sell on Etsy a 'hobby'.

Well, it is if you don't make more than £1000 in gross income, as there is a tax free allowance for that.

 

[413x]

I thought gross income was the income AFTER product costs:

Net vs Gross Income | London and Zurich

Net Income and Gross Income - what's the difference? Find out in this article and use our formulae to calculate both for your business.

www.londonandzurich.co.uk

"What is Gross Income?​

Gross income is the total amount of income that your business has gained over a set time period, with only the cost of goods sold (COGS) subtracted.

COGS are the total cost of all the things directly related to providing the goods and/or services sold by your business. For example, the cost of manufacturing, packaging, logistics, and salaries of factory employees would all be included in COGS. But indirect costs such as marketing expenses would be excluded.

This is the formula you can use to calculate Gross Income:

Gross Income = Gross Revenue – COGS"



So if you bought £9000 worth of goods and only sold them for £10000, you have only made £1000 gross income no?

I thought in this case gross income was WITHOUT costs deducted.

Ie if you sold something for 1100 that cost 900 you breach the 1000.
Therefore you need to fill in SA.

You made 200 profit. And therefore get taxed on 200 by 20 or 40 etc percent?

 

[Kenai]

Well, it is if you don't make more than £1000 in gross income, as there is a tax free allowance for that.

You know what I mean

There seem to be plenty of people under the impression that making money isn't taxable regardless, because "it's a hobby" or something.

Though it would be nice if true, I'd be letting HMRC know my current hobby is project management

 

[Jono8]

I thought in this case gross income was WITHOUT costs deducted.

Ie if you sold something for 1100 that cost 900 you breach the 1000.
Therefore you need to fill in SA.

You made 200 profit. And therefore get taxed on 200 by 20 or 40 etc percent?

Well, not according to London & Zurich.

 

[413x]

Well, not according to London & Zurich.

I'm sure it is. Because what you posted above was what I used to think.

 

[Raymond Lin]

So what is the difference between Turnover and Gross income then?

 

[Mercenary Keyboard Warrior]

I thought in this case gross income was WITHOUT costs deducted.

Ie if you sold something for 1100 that cost 900 you breach the 1000.
Therefore you need to fill in SA.

You made 200 profit. And therefore get taxed on 200 by 20 or 40 etc percent?

There are few scenarios as explained here

Tax-free allowances on property and trading income

Find out about annual tax-free allowances for property or trading income and if you qualify.

www.gov.uk