I’ve every faith that all my fellow e4 UK eBay sellers are upstanding citizens who have no problems filing their self-assessment, but thought this was an interesting article to share! TL;DR points below.
From 1st January 2024, online firms such as eBay, Vinted, Airbnb, and Uber will be required to report income data from its users to HMRC.
The first round of shared data will include income from the 2023/24 tax year, i.e. April 23 to Apr 24.
Data will only be reported to HMRC if you’ve sold 30 or more items within the year, AND have total income on the platform (before fees taken off) of more than 2000EUR or approx £1700.
This does not introduce a new tax, and existing tax rules have not changed. Eg if you earn £1000 or less in gross income from eBay sales, you likely do not need to report this to HMRC due to the £1000 tax-free trading allowance. It simply gives HMRC more visibility into people’s income.
The limit is too low in my opinion, the number of transactions is retarded but for everyone handling their sales properly I see this reducing competition as most private sellers might be driven away from the platforms because they don’t want to get into trouble.
To clarify on this as this info is slightly misleading.
The UK tax system states that you DO NOT have to pay any form of tax on items that were not sold FOR PROFIT (i.e., bought with the intention of reselling) - even if you actually made a profit.
eg. If you had sold cards that you have owned since you were a child, they were likely not bought FOR PROFIT at the time - and therefore are not subject to tax.
eg.2 If you bought a card 1-2 years ago for your collection and sold it today, it was arguably not bought for profit and therefore not subject to tax.
You also have 0% tax on capital gains profit up to £6000 a year - meaning if you are NOT trading as or objectively are NOT a business (see badges of trade on HMRC website) then any profits up to £6k are likely not going to trigger any tax owed.
After the 6k profit per year, then there is an objective test applied to see if it falls under badges of trade and/or if it is applicable to capital gains tax.
Basically what this means is that if you are just buying cards as a hobby, not for profit, and are only selling a small amount of items per year (especially if less than £6k in profits) you do not need to do anything.
Another note, if you submit ONE self assessment for a tax year, you will need to continue doing so for future tax years or may be fined.
not a tax adviser so do your own research and please speak to your own tax advisor as collectables are a grey area in this as opposed to buying clothes, wearing them, and selling them on ebay a year later (so make sure you have your evidence ready if HMRC come calling)…however it is most likely that if anyone is doing large £ sales, or a large volume of sales throughout the year, or BUYING for the purposes of flipping instead of collecting, then yes you should speak with a tax adviser…but for the most part people wont be affected by this.
I don’t think the article was misleading as it defines the criteria for who the new data submission requirements will most likely affect. Without wanting to sound argumentative (that’s not my intention so forgive me if it comes across that way), but I believe some of what you wrote is more misleading than the article, for example:
You then explain why this might be the case, but in many instances these will fall under the category of “Chattels” which is again another grey area. So yes as you say, always best to consult a qualified tax accountant if unsure.
The OP is intended towards people buying and selling on eBay as a business/side hustle to generate income, in which case they would under no uncertain terms need to take note!
Admins, can we please split out the US comments into a separate thread? It’s becoming a discussion about the US and the $600 limit which isn’t relevant here and has also been discussed at length.
Chattels are taxable if it was a FOR PROFIT purchase originally - and/or if it goes over the £6k a year limit.
I posted my comment as a lot of people who have sold something on ebay may be scared by the original post - and I wanted to clarify.
TDLR
If you are in the UK and are NOT buying or selling cards as a business or FOR PROFIT (ie. purchased a card to flip, which is an objective test) and/or do not make over £6000 a year profit from it, you likely wont need to do anything.
This just seems impossible to track in the world of collectables. Who’s to say everything I sold I did get when I was a child?
Whos to say I not selling things at a loss?
If you are claiming to sell at a loss, then you need proof of purchase / expenses but this is only needed if you bought it for profit, or were trading as a business or it was over a £1k sale (not profit - £1k is the level that they may ask for evidence).
In terms of saying everything you had, you had since you were a child - it is an objective test based on your facts.
If HMRC did investigate you, it would be clear pretty fast if you were buying/selling frequently (see badges of trade) and therefore should register profits as income OR if you weren’t frequently selling, but made over £6k a year profit from it, then it would be subject to CGT.
Yeah, I have seen this and not been too happy about it. I have easily exceeded the limit last year but it was all the constant buying and selling of collectibles as and when I either got bored of older stuff, or needed to sell stuff to justify buying new stuff.
So it isn’t a business or an intent to flip, buy to sell etc.
But if they go down an automated route and computers simply tally up bank deposits with a failure to send in a self assessment and fire out demands to submit a return or else, how can you prove anything? Nobody keeps receipts for every single purchase to prove it was purely hobbyist or sold at a loss vs original purchase price.
A few points:
Some people seem to think we will be protected by the HMRC being understaffed ALREADY (let alone having to deal with all of this new work) and only having time to go after the big fish i.e. people blatantly running businesses on personal accounts, but if it’s all automated and tracked by tech (as things really SHOULD be in 2024) then there will only be a black-and-white judgment, surely.
There seems to be a lot of technicalities, grey areas, and ways of saying that you are exempt but, even if any of these are true, I don’t think HMRC are the kind of organisation you can just have a chat with and explain your individual case. It will be a rigid “here’s our figures/evidence, supply paperwork/proof or you will have to pay”.