What’s the cut-off point between regularly clearing out your clutter and being a regular seller on eBay? It’s always been something of a grey area. But not anymore, as HM Revenue & Customs has launched an online guide to online trading this week – and it could mean you being liable to tax.
To sum up, online traders are considered to be self-employed if they sell goods they bought with the intention of re-selling them, make items themselves and sell them, intending to make a profit, sell or buy goods on behalf of others for financial gain (on commission) or provide a service and receive payment in cash or in kind.
If the answer is yes to any of these, you may need to pay Income Tax, National Insurance Contributions and fill out a Self-Assessment return – and if you are making enough, register for VAT. If you are selling the odd item such as unwanted presents or possessions, and are not buying goods to trade for profit, you are considered to be a non-e-trader and do not have to pay Income Tax or National Insurance.
HMRC’s Director of Risk & Intelligence, Stuart Hartlib said: “In the new guidance, there are examples to help you work out if you have to pay tax when you sell items online. You can also access information related to online trading about issues such as Capital Gains Tax and VAT. This site is designed to make registering and paying tax easier, so you can work out whether you are self-employed and need to file a return.”