We can also help you file your annual tax-return and look for legitimate ways you can save tax. If you do have to register for self-assessment, you can do so via this page. You just need to answer a few questions and it will advise you on whether or not you need to pay tax.
If you’re still unsure whether you need to pay income tax and national insurance on online sales, HMRC has a useful online tool. I’m still not sure whether I need to pay the ‘eBay Tax’ In the near future, many online sites will be forced to share details of their users’ income with tax authorities. They have powers to obtain information about your trading activities and, if you have undeclared income you can get slapped with penalties on top of the tax you owe. Their teams are on the lookout for accounts that regularly post items for sale and are clearly trading. HMRC monitors online sites such as eBay for evidence of trading.
It can be tempting not to tell HMRC about trading income, especially if it’s just over the £1,000 threshold. If you have a smaller turnover, you can still register for VAT, but speak to your accountant first to find out whether this is worth doing. If your online selling really takes off and you end up with a taxable turnover of £85,000 or more, then you will have to register for VAT. This means you’ll have to pay tax on all trading earnings if you make more than £1,000 per year. So, for example, if you have a full-time job and earn £40,000 per year, you won’t have any tax-free allowance left. It’s important to remember that personal allowances are based on your entire income, not just your trading activity.
(For more details on personal allowances, see this post). You don’t pay income tax on earnings under £12,570. When you register for Self-Assessment, you have to declare your earnings and pay any income tax and National Insurance that’s due.Ĭurrently you are allowed to earn up to £6,725 before you need to pay Class 2 National Insurance. If you regularly trade online in order to make a profit, you must register for Self-Assessment if you earn over £1,000 per year. Regular online trading and the ‘eBay Tax’ However, you need to keep a close eye on your income in case it starts to reach this threshold. In general, if you earn under £1,000 in a tax year before deducting trading expenses, you won’t have to pay tax on this income. If you occasionally buy or make items to sell online, you need to be more aware of the so-called ‘eBay Tax’. However, this doesn’t apply if you sell your car. There’s one exception to this – when you sell an item worth more than £6,000 you may have to pay Capital Gains Tax. As an example, if you cleared out your attic and sold your old possessions on eBay, you don’t have to tell the taxman. This is because you will rarely get more money than you paid for them. If you sell your old possessions online as a one-off activity, you are unlikely to have to pay tax. In this article we unpick the rules covering online selling and help you understand which ones apply to you. However, if you do sell online you need to be aware of the tax rules – and whether you’re likely to fall foul of the so-called ‘eBay Tax’. There are plenty of websites that make selling online simple, ranging from eBay and Etsy through to Gumtree and Vinted. One popular way of doing that is by selling items online. Given the current cost of living crisis, it’s little wonder that many people are looking for ways to supplement their income. Shareholder Agreements and Business Continuity Selling your BTL property – things to look out for Strategies for improving Buy-to-Let income Married Landlord? You could reduce your tax bill. Should I transfer my BTL properties into a limited company? Your Needs Audits, Accounts & Bookkeeping
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