Just like any other traditional business, eBay sellers also have to pay a due amount for tax on eBay sales UK. In case you forget your deadline, you’ll have to pay a designated amount to HMRC as a penalty or fine.
The UK laws oblige you to pay taxes whether you’re operating any big business or independent business. The same is the case with eBay. Whether you’re operating as an eBay seller or affiliate marketer, you eventually have to get down to pay a certain amount of tax on beat sales the UK to HMRC.
What amount am I Eligible for as an Online Seller?
The 2016 finance act made self-employed individuals comply with HMRC’s law to declare their financial income. There are certain factors that you need to keep in your mind before making a big payment. Let’s dig deeper into these elements that help you consider a trade:
- You’re generating profit out of your business.
- There is a similar transaction over a period of 2 months.
- You’ve invested in an item that you want to sell out to make a profit.
- The item is sold at a fixed price to retailers.
- There’s a limited time involved in buying and selling the product.
- You’re modifying an item to sell it.
If you take a look at all the eBay business trades, this is a constant pattern you have to undergo to keep yourself self-stable. You buy an item, you either modify it or you sell it under a brand name at a fixed price. That’s why it classifies as a trade under the UK finance act of 2016.
What Amount Do I Have to Sell to Pay the Taxes?
It will be illogical to tax every person who is selling out a certain item on eBay. There has to be a threshold that defines what amount you’re eligible for. Until 2017, people earning around 1000 pounds generated through eBay were excluded from tax. This was done to encourage people to move on take part in uplifting the digital economy. The amount is just eligible for people with a trading allowance. People having a personal allowance sit at a threshold of £12,500 for the 2020/21 tax year.
What if You Don’t Declare Your eBay Earnings?
It’s ok to sell low-value items and not tell HMRC about it. The important part is that is your business classified as a trade or not. The moment to reach the threshold of 1000 pounds, your eligible for taxes. Go on and fill out that self-assessment. Even if you’re evading a tax man, remember that your transactions are completely trackable. This means that you need to keep your earnings in order.
Get Help from a Professional
Now that you know the tax thresholds for online income (also classified as trade), know that other taxes might be eligible on other items too. Let’s say you’re buying a car more than worth 6000 pounds. You’re eligible to pay the capital gains tax. But the good news is that if you’re getting a profit of 11,000 pounds, the sales tax of capital gains return might not be eligible for you.
It’s always a good idea to have an expert tax accountant to help you figure out your cash in and cash out. This helps you figure out what taxes are you eligible to pay, get help with a trade allowance or personal allowance, and pay all your taxes on time.