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

Jono8 said:
Well the question is whether the cost of goods is "allowances and expenses", which i didn't think it was.
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It basically says.. You can either use the 1000 exemption Or costs and expenses. Not both.


Say you sell 1100 of stuff and it cost 200
Your profit is 900.
Better to take the 1000 exemption and pay tax on the 100 over it.

If you sell 1100 and it cost 1050 it better to not use the 1000 as then you'd be paying tax on 100 and (1100-1000) vs 50 (1100-1050).


I thought the 1000 was profit. Because I don't get why you can sell 1000 pounds of stuff that has no cost and pay nothing. But sell something for 1001 that cost 901 and have to pay tax on 100.

I understand now. But I still don't totally get why... Expect for making it easier for HMRC
 
413x said:
It basically says.. You can either use the 1000 exemption Or costs and expenses. Not both.


Say you sell 1100 of stuff and it cost 200
Your profit is 900.
Better to take the 1000 exemption and pay tax on the 100 over it.

If you sell 1100 and it cost 1050 it better to not use the 1000 as then you'd be paying tax on 100 and (1100-1000) vs 50 (1100-1050).


I thought the 1000 was profit. Because I don't get why you can sell 1000 pounds of stuff that has no cost and pay nothing. But sell something for 1001 that cost 901 and have to pay tax on 100.

I understand now. But I still don't totally get why... Expect for making it easier for HMRC
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Yes the £1k is just to filter off the technically you should have reported some tiny gain that HMRC don't want to have to deal with 30 million of per year cases.
The vast majority are not going to make more than £1k getting a few bungs for helping out on stuff.

They also want to know people who are trading to get them on the radar.
 
Mercenary Keyboard Warrior said:
Yes the £1k is just to filter off the technically you should have reported some tiny gain that HMRC don't want to have to deal with 30 million of per year cases.
The vast majority are not going to make more than £1k getting a few bungs for helping out on stuff.

They also want to know people who are trading to get them on the radar.
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I guess people will fall into the

A) "in just making over 1000 or under 1000..i don't want to bother with SA I'll slow down/stop."

Or

B) "I'm making enough over 1000 or my profit is high enough it's worth doing SA."


Irrespective, for HMRC.. Its worth it as anyone who falls into A or B wasn't reporting anyway.. So no loss.. But anyone in B = more tax income.

I expect, if everyone reported correctly, it could be substantial
 
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I was planning of off-loading a good chunk of my RC car collection this year (about 20 cars worth between £150 and £2k each on eBay) and was worried about this new rule.

But checked with accountant and he said no need to worry about this new rule as I'd be selling personal possessions that weren't purchased specifically to be sold.

So happy days
 
Mercenary Keyboard Warrior said:
COGS is purchased cost (or in this case expenses), but if you go that way you lose the £1k "no need to worry your too insignificant" allowance.
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So "Gross Income" does not in fact mean income after COGS? That is confusing as most places state that it does, and that gross profit and gross income are synonymous with each other.
 
Jono8 said:
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.
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That particular quote doesn't specify whether it's calendar or tax year, and January 1, 2024 is not mentioned either - so it could technically be tax year. They did say "calendar year" somewhere else, so the fact they're not saying "calendar year" in this sentence, could mean something. Just reading the text, it does sound like it's gotta be calendar year, but given that tax reporting is usually done before the end of January, and it's for the previous tax year, I fear that eBay might've simply made a mistake presenting this info on the page.

Here's a situation that makes me worried eBay's wording might be misleading: when you have return (and the same with dispute case deadline), eBay says you have to return an item before 15 January. Actually, what they mean is before the end of 15 January. Ie, not before 15 Jan 00:00, but before 15 Jan 23:59.
 
This is how I read it...

If you're registered with eBay as a business and/or your eBay turnover exceeds £1000 the eBay will send data to HMRC. This will then trigger an automatic 'you might need to consider your eBay transactions on a self assessment tax return' letter.

For private individuals this is more of a 'heads up' than an actual tax demand. For businesses with incomes other than eBay it's a reminder to make sure any eBay activity is included. This is important if you'#re VAT registered as you should be charging VAT on everything that is public facing.

I doubt there will be any specific calculations and demands for payment sent out that's going to be difficult to do without knowing the full income situation - but I would expect the system to cross reference eBay activity to the tax return to ensure it's included ion any self assessment or company accounts. They might add a section to the forms.

Generally, profit or capital gains are taxable and VAT has to be added at point of retail. Businesses that are VAT registered will need think about this - individuals looking to clear out stuff from the garage or loft that they bought for themselves won't.

Technically, those items have already been taxed and bought for personal use. It's items bought to be sold for profit that this is targeting.

I'm not worried about it in the slightest.
 
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Your tax bracket is based on your total gross taxable income..

Say if you was to get 49k from your day job.
1k from your side hustle, eBay,
3k from your capital gains in trading stocks..

Your total taxable income will be 53k which will place you in the higher tax bracket (40%)

You may not get taxed on those income as they fall in the tax allowances limit, but if your receiving interest from a normal account (non isa), your tax free allowance limit will drop from 1k to £500. And you will have to pay tax at 40% for anything above £500.

I honestly thought it was 50k+ the other tax free amount, but my niece who is a tax account told me just before Christmas and she’s been rearranging stuff for me so that I remain under the 40% limit.

In regards if the amount from stuff you are selling on eBay is profit or not.. if your doing it as a side business or it’s personal.. that’s a case by case issue.
 
Jono8 said:
Ebay explicitly state that it is 2000 euro or 30 items sold.
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Does that apply to the UK?

That's where the £1000 comes from...

Either way... I'm not bothered as I don't use eBay to sell goods in a 'business' way. I use it to get rid of crap from the garage/attic or stuff I've collected over the years.

HMRC are very welcome to pop in and spend a week going through my accounts. I'm happy to make a PowerPoint and give a massive presentation explaining every item provided they book a venue and pay for the interval snacks.

:D
 
Jono8 said:
So "Gross Income" does not in fact mean income after COGS? That is confusing as most places state that it does, and that gross profit and gross income are synonymous with each other.
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Gross means unadjusted. (Generally)
Eg your salary would be your gross income, before deductions
Your take home would be your net salary, ie after deductions

In this case
The gross income would be the amount you were paid from the platform
Your net income would be after costs of purchasing, selling (including platform fees)

Thing is when you start moving into trading "income" is generally replaced with "revenue".
 
Kenai said:
Yes.

£1000 is the trading allowance with regards to your taxes.

30 items / €2000 is the online platform reporting trigger.

They are separate things.
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Exactly.
And you could sit between, technically liable but with Ebay not forwarding your details.

I suspect ebay will send a generic warning email to everyone, and HMRC will send a slightly less generic letter to everyone they are sent data for.
 
Mercenary Keyboard Warrior said:
Exactly.
And you could sit between, technically liable but with Ebay not forwarding your details.

I suspect ebay will send a generic warning email to everyone, and HMRC will send a slightly less generic letter to everyone they are sent data for.
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I'd imagine the first HMRC one will likely be asking you to reply and declare you are not trading and were simply having a big clear out/selling old personal possessions or something.
 
Jono8 said:
I'd imagine the first HMRC one will likely be asking you to reply and declare you are not trading and were simply having a big clear out/selling old personal possessions or something.
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I would be very surprised if they would ask you to reply.

Their normal approach (as I posted above in regards crypto) is to notify you that you may have something to declare and then leave it up to you to decide what to do.
 
From Ebay's website:

What you need to know

As a UK resident, when you sell over €2000 or surpass 30 sales transactions within a calendar year, eBay is obliged to report certain personal or business information to HMRC in accordance with the UK digital sales reporting legislation. Starting January 2025, the prior year's information will be annually reported to HMRC each January and a copy of the reported data will be provided to you. When prompted to do so, please provide eBay the requested tax identification information specific to you as a business or individual. UK digital sales reporting requirements do not change your existing tax obligations or create new tax obligations for you. To find out about your tax obligations, please reach out to HMRC or a tax advisor.
I suspect the frequency of sales data reporting will vary across platforms, but that seems to be what Ebay are doing.
 
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