eBay Tax Question?

[xTic_Tac_Toex]

Hey guys,

Like many of you on here, I collect several different types of toys. My rule to myself though, is that I can never actually spend any money. So I will never buy at 'full price', but purchase toys in lots where I can sell some of them on and know that I can break even, or sometimes even make a little profit when I re-sell. I don't do it for 'business' - it's my way of justifying my purchases on a budget, as it were 

I've actually made over £1000 this year, which I'm surprised at. Not all of it is toys though - some of it is furniture we sold, clothes we cleared out, homeware stuff etc. The question is, do I need to pay tax on these sales, even though the money is pretty much levelling out? If I calculated it all, my profits would be small overall vs what I paid, or else non-existent.

E.g, I recently bought a nice lot of 60s Barbie items for £75. I will probably sell a few outfits and shoes and make that back, but keep the rest, so will break even and thus feel happy that I can keep the rest of the bundle for my collection.

If anyone else justifies their collecting habits by buying in lots and selling back some of it as I do, do you worry about paying taxes on these sales? I've never thought about it before because I've never made this much in a year on eBay, but I think with the virus this year, I've been buying more toys than usual, being stuck at home a lot and everything 

Any advice is much appreciated, thank you!

[tailrustedtealeaf]

From an American perspective, I always factor in the price of the item so you get your actual profits. The cost of the items themselves would be considered business expenses. I would still check to see if the small amount you have needs to be reported since every place is different. May be different overseas though.
For 2021, I'm certainly going to track my expenses better.

[banditpony]

It really depends on your local laws...

But your "earnings" are actually what you make after you subtract what the item sold for from what you purchased it for. It's a good idea for people to keep track of this stuff.

My husband got hit from paypal one year needing to prove he wasn't making lots of money off of his camera hobby. He did flip, but sometimes he just bought a camera to play with, then resold it for the same price.

[Taffeta]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

I am pretty sure we have a threshold and that so long as you don't go over that threshold it's not taxable. But things may have changed so it's worth looking into it.

It's also worth remembering that people on this forum come from all over the world and tax regulations are completely different in different places, so it's better to go right to the source.

The UK doesn't have a system of taxing purchases etc after the fact in stores - you don't pay tax added at the till, for example, it's factored into pricing of everything already. I am not sure whether that does or doesn't impact other kids of purchases, but you said yourself you are breaking even, not selling for profit as a final intention.

I did a quick search and this came up which may help:
https://www.litrg.org.uk/latest-news/news/120402-selling-things-online-hmrc-are-after-you
But I would go direct to HRMC and have a dig around if you want to be sure. The above is a considerably old article and doesn't take into consideration any of the things that have happened more recently, such as Brexit stuff and the current pandemic.

[xTic_Tac_Toex]

Thank you everyone for your advice! I truly appreciate it.

I am actually self employed, so I already have to do a self assessment for my small business in the UK. In which case, maybe the safest bet is to make a new folder for my eBay stuff in my file and keep track of price paid for each lot vs how much I made back, or if I simply broke even.

Like tailrustedtealeaf said though, it is good to track one's expenses, so maybe I should do it anyway for the sake of keeping up with my finances.

I've done some more research, and apparently £1000 is the yearly threshold you're allowed on eBay before you have to pay tax.

Let's just say that by the end of the year mine was up to £1500, but when I worked out my 'expenses' (e.g. the bundles/job lots of toys I bought), my profit from those sales was only actually £500, because most of the time I am just making back my money on the toys in the bundles that I don't want.

Should I then not worry about it at all because it's under £1000, even though my 'profit' on eBay looks like over £1000?

[banditpony]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

I've done some more research, and apparently £1000 is the yearly threshold you're allowed on eBay before you have to pay tax.



Should I then not worry about it at all because it's under £1000, even though my 'profit' on eBay looks like over £1000?

It's good to just have everything organized in case eBay reports whatever you made to whatever authority and you have the proof it wasn't the actual profit. I'm going to guess that the chances of that are pretty low, but it would be less stressful to be prepared.

This is just going to be my advice to most people, because it happened to my family. u_u;

[xTic_Tac_Toex]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

I've done some more research, and apparently £1000 is the yearly threshold you're allowed on eBay before you have to pay tax.



Should I then not worry about it at all because it's under £1000, even though my 'profit' on eBay looks like over £1000?

It's good to just have everything organized in case eBay reports whatever you made to whatever authority and you have the proof it wasn't the actual profit. I'm going to guess that the chances of that are pretty low, but it would be less stressful to be prepared.

This is just going to be my advice to most people, because it happened to my family. u_u;

I greatly appreciate the advice, thanks banditpony. I'm going to take better care to document it all now in the future, and will go back over this past year's sales to straighten it all out. Like I said I'm self employed, so very familiar with documenting my business sales and expenses

[Taffeta]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

Which is why, as I said, that's why looking at the HMRC website is the best idea.

HMRC = Her Majesty's Revenue and Customs. They are the official government organisation that deals with tax related issues in the United Kingdom, so ultimately they are the organisation that would be making the call. We're not talking about 'in some places'. We're talking about specifically in THIS place, so that would be the first port of call.

But as I said, and as the OP also mentions, there is a private use threshold. I am fairly certain that would mean £1000 in profit, but that is also something HMRC would have to advise on.

Having a business licence may affect how they see the transactions and that being the case, it doesn't hurt to keep good records. But if the OP is really concerned, it's possible (sometimes) to call HMRC directly and ask them what constitutes private and commercial for tax purposes. That's the only way you actually find out what the law is and whether you are within it or need to file taxes.

[banditpony]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

Which is why, as I said, that's why looking at the HMRC website is the best idea.

HMRC = Her Majesty's Revenue and Customs. They are the official government organisation that deals with tax related issues in the United Kingdom, so ultimately they are the organisation that would be making the call. We're not talking about 'in some places'. We're talking about specifically in THIS place, so that would be the first port of call.

Sorry, I wasn't trying to give specific tax advice. I made my comment based on the wording of the first part of your sentence using the phrase "to me..." seemed to be opinion.

[Taffeta]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

Which is why, as I said, that's why looking at the HMRC website is the best idea.

HMRC = Her Majesty's Revenue and Customs. They are the official government organisation that deals with tax related issues in the United Kingdom, so ultimately they are the organisation that would be making the call. We're not talking about 'in some places'. We're talking about specifically in THIS place, so that would be the first port of call.

Sorry, I wasn't trying to give specific tax advice. I made my comment based on the wording of the first part of your sentence using the phrase "to me..." seemed to be opinion.

For clarity, "to me" was an opinion, but qualified by the advice to consult the actual official authority to see what they said about it. Frankly, I think that's the only safe option in a situation like this, and that it's actually unhelpful to have theorising from places where there are different tax rules in place, because it might lead to a problem for the OP along the road.

It's also not helpful to undermine advice to consult the UK govt revenue agency based on a vague assertion that in 'some places' (which as the OP has mentioned clearly is not the case for the UK) $10 is $10 of income. If you didn't know HMRC was the UK revenue agency then you didn't know - but it's still something to keep in mind.

[banditpony]

TBH, to me it sounds like it's not a business, it's buying to collect and then reselling the bits you don't need, but the thing you would need to do is look at HMRC's page and see what they say about stuff like that.

In some places, it doesn't matter if it's a "business". If you earn $10, then that's $10 of income.

Which is why, as I said, that's why looking at the HMRC website is the best idea.

HMRC = Her Majesty's Revenue and Customs. They are the official government organisation that deals with tax related issues in the United Kingdom, so ultimately they are the organisation that would be making the call. We're not talking about 'in some places'. We're talking about specifically in THIS place, so that would be the first port of call.

Sorry, I wasn't trying to give specific tax advice. I made my comment based on the wording of the first part of your sentence using the phrase "to me..." seemed to be opinion.

For clarity, "to me" was an opinion, but qualified by the advice to consult the actual official authority to see what they said about it. Frankly, I think that's the only safe option in a situation like this, and that it's actually unhelpful to have theorising from places where there are different tax rules in place, because it might lead to a problem for the OP along the road.

It's also not helpful to undermine advice to consult the UK govt revenue agency based on a vague assertion that in 'some places' (which as the OP has mentioned clearly is not the case for the UK) $10 is $10 of income. If you didn't know HMRC was the UK revenue agency then you didn't know - but it's still something to keep in mind.

Oh, I see. My comment was not made because I didn't OP should look at the site. Actually, it was rather the opposite.

All I said was to keep track of it because I had something similar happen to my family. What we "made" on eBay was above a certain threshold, and did NOT reflect what we actually made.. but Paypal reported it. And it was on us to prove what the actual profits were (which was hardly anything). It's anecdotal. But the advice to keep track of purchases/sales, is pretty universal IMO.

[Taffeta]

Keeping track of transactions is very sound advice, especially for someone with a business licence and experience with annual self-assessment.

It also didn't sound like the opposite, bearing in mind that, although I had named HMRC, you referred to ebay reporting to 'whatever agency' as if HMRC was not important. And that bothered me a bit, which is why I am still needling this.

When dealing with matters of law that differ in each country, it's better to know what the agency is for that country before attempting to give any advice, anecdotal or otherwise, that could ultimately mislead.

I don't like HMRC particularly, they can be a difficult organisation to work with (when I was at the library I used to claim tax credits, and they would arbitrarily try to withdraw them for no reason at times and I'd have to go shout at them to get them to sort it out.) So it's pretty important for me that instead of theorising about stuff like tax, it's better to go to the horse's mouth.

ETA - I am not sure either what the rules are around paypal and income. Paypal over here is not regulated by the main company in the US, it's regulated in Europe - I forget where at the moment - and it may change in January as well because of Brexit, not sure. Whether that will inform tax thresholds or not I don't know. For me that's a whole other level of investigation that needs to be checked out with paypal.co.uk (and while keeping evidence of the transactions is still important, again, the regulations of the specific sites involved, including ebay.co.uk as well most likely, matter too.) Data Protection legislation may also kick in here. I really, genuinely don't know, and wouldn't like to theorise about that.

I saw an article after Harry and Megan's baby was born that no matter where they are in the world a US citizen pays US taxes. Even if they never live there. We don't have that here, so I am not sure whether the situation would be the same in terms of gathering information. It might be. But it needs to be looked into, rather than assumed.

[banditpony]

I was not trying to give specific tax/law advice. This is why I kept it more generic with my terminology to not give any specifics.

[Taffeta]

I was not trying to give specific tax/law advice. This is why I kept it more generic with my terminology to not give any specifics.

Then maybe you should have left my remark alone, as doing so conveyed a different impression.

[banditpony]

I was not trying to give specific tax/law advice. This is why I kept it more generic with my terminology to not give any specifics.

Then maybe you should have left my remark alone, as doing so conveyed a different impression.

I'm sorry about that. I've tried to clarify I made a comment for the opposite reason.. I'm not always good at explaining things. u_u;