Ebay vinted sellers etc

[Lucky2shoes]

Albu to think the latest news of only been allowed to make £1000 a year selling your unwanted goods before declaring for tax purposes is an absolute disgrace and pure greed when you've paid out of your own pocket for these items

I think it is a bit mad if you are selling unwanted clothes etc - like you say you have already paid for these including the VAT. I think the point is to target people who are buying and selling with the aim of making an income though as opposed to selling the odd thing online after a clear out

I haven't seen this, does it mean £1000 profit as in the cost you paid you then need to get more than that? Or does it mean £1000 in sales. Either way it's not going to be enforceable if someone made £1005.

For most people the money will go into a PayPal account and they are likely then using the same account to buy more stuff. So it's hard to regulate since it's not coming into a bank account.

This isn't news its always been that case.

It doesn’t apply for people selling their own belongings. It covers people “trading”, ie buying or making things for the express purpose of selling them.

I agree it does. But eBay etc report your earnings and I can't see the filter either by eBay or HMRC where they can decide that jacket you got as a gift that didn't fit so it's BNWT isn't one you bought at a charity shop for a steal and now you're selling on to make a profit. How can eBay or HMRC tell?

I think PayPal payments go straight to your bank unless is friends and family payments. From what I recall for at least a couple of years.

Exactly. Where do you draw the line? If that's the case then people doing returns will have the right to put the initial cost as expense? Petrol costs to go and buy the items? Or use of internet if bout online? Seems a bit ridiculous to me.

The £1000 is profit. Ie above what you paid.

The reporting about this has been appallingly misleading but the detail is in there.

If you're selling at a loss, eg your £50 jeans for £5, then that is not profit and will not be taxed.

Where's the source for this?

They will ask you, if you have lots of earnings that look like they could be taxable they may well ask you to provide detail. Up to you what you tell them.

@DyslexicPoster e.g https://www.theguardian.com/money/2024/jan/01/selling-goods-online-be-warned-hmrc-will-soon-know-about-it?CMP=Share_AndroidApp_Other

The headline is incredibly misleading considering the article states (quite far down) "HMRC says people selling off clothes or items that they originally bought at a higher price will not be liable for tax on that income."

This has been the tax rule for years.

You have to be TRADING with over £1,000 of income to have to do the tax return. Selling your old clothes is unlikely to be considered trading (unless you are enhancing them first, keeping them for a short period of time, or have a high volume of transactions).

Even if you do meet the threshold for trading, and generate more than £1,000 of revenue, then there’s no tax to pay unless you’re making a profit (i.e. selling for more than you bought it for), which is unlikely for most Vinted sellers selling their old clothes.

As to how HMRC can tell, we have a self assessment tax system so you have to honestly declare it yourself. If you’re lying or misrepresenting the position, that’s illegal (tax evasion/fraud).

If HMRC disagree with your analysis they’ll ask for records to justify your position. If you have evidence these are just old clothes (all sold as worn, only one of each item sold, proof of purchase for any of them to show you held for a long time, pictures of you wearing the clothes), HMRC will accept your position and no tax return or tax is required.

No it’s not, it’s gross annual income.

https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

Apologies, you explained it better than me. The point is it's profit that will be taxed, which your average Vinted/Ebay seller won't be making.

Even if they cherry pick a couple as examples how do you prove the jacket was a gift not bought cheap to sell on? DH has a jacket we're selling on eBay at the moment (hence it's a real life example) but his dad would be mortified if DH asked him for proof he bought it and disappointed his son sold it on even though it's 2 sizes too big

So what does DH do?

Sorry, I'm confused about the context. Are you likely to have an income from this of £1000+ in the financial year? What kind of self-assessment do you do already?
If you were using 'it was a gift' for 100 items then they might want to look into it further. Self-assessment is usually just based on self-reporting unless you are audited. You are unlikely to be in the pool for auditing unless you are making over a certain threshold.

If you say that an item was a gift I don't see what grounds they would have for asking any further. Have you had experience of this?

The reporting about this has been

good from BBC radio. The rules (& why 2nd hand sellers like me are exempt) were very clear in all the stories I have heard about this.

Not yet but if the sales are automatically reported to HMRC from eBay it will happen. I sell lots of second hand stuff - dolls houses, jigsaws, clothes etc. It would probably tip over into +£1000. Then I get audited by HMRC and I have no way of proving I'm not selling for profit.

Why do you think you would be audited just for reaching the threshold for self- assessment? It really doesn't sound like you have anything to worry about.

Are the things you sell your own unwanted items? If so, you’re fine. If you’re buying them specifically to sell then it counts as trading and you have to pay tax.