HMRC to start enforcing the taxation of profit made from sales on Depop, Vinted, Ebay etc.

[Sara125]

https://www.bbc.co.uk/news/business-67855872?xtor=AL-72-[partner]-[bbc.news.twitter]-[headline]-[news]-[bizdev]-[isapi]&at_campaign_type=owned&at_link_id=1B00EFC6-A958-11EE-8E67-1A72D9B5F045&at_format=link&at_ptr_name=twitter&at_link_origin=BBCNews&at_link_type=web_link&at_medium=social&at_bbc_team=editorial&at_campaign=Social_Flow

Some important points highlighted in the article:

-Individuals have a £1,000 tax-free allowance for money made through property

-There is also a £1,000 allowance for "trading" income - for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online

-People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them

What a joke. It’s not like there is a huge profit to be made selling depreciated items. Is it really fair to tax items that one is making a loss on?

People are having to take up side hustles BECAUSE times are hard as it is, and the govt want to tax that also…meanwhile the MPs, big corporations and the billionaires of the world can all do what they want.

 

[jasT1981]

Meanwhile Michelle Mone and Husband sitting pretty after massive PPE Fraud.

No wonder the country is in the state it is right now.

 

[Jericholyte2]

https://www.bbc.co.uk/news/business-67855872?xtor=AL-72-[partner]-[bbc.news.twitter]-[headline]-[news]-[bizdev]-[isapi]&at_campaign_type=owned&at_link_id=1B00EFC6-A958-11EE-8E67-1A72D9B5F045&at_format=link&at_ptr_name=twitter&at_link_origin=BBCNews&at_link_type=web_link&at_medium=social&at_bbc_team=editorial&at_campaign=Social_Flow

Some important points highlighted in the article:

-Individuals have a £1,000 tax-free allowance for money made through property

-There is also a £1,000 allowance for "trading" income - for example, if you offer tutoring or gardening, or if you are selling new or second-hand items online

-People earning below those thresholds may not have to fill in a tax return, but should keep records in case they are asked for them

What a joke. It’s not like there is a huge profit to be made selling depreciated items. People are having to take up side hustles BECAUSE times are hard as it is, and the govt want to tax that also…meanwhile the MPs, big corporations and the billionaires of the world can all do what they want.

I love how they all espouse the greatness of 'small government' and how government shouldn't interfere in people's affairs. Unless that is if they want access to your bank account if you're on UC or making any kind of money yourself.

 

[Rado_N]

There’s no change in what is taxable. They’re not “starting to tax” this income, it’s always been reportable and taxable, this is just an information sharing agreement between HMRC and the apps, to stop people hiding it.

 

[Conor]

It would be tax on profit, not tax on the item sale price, no?

 

[Sara125]

There’s no change in what is taxable. They’re not “starting to tax” this income, it’s always been reportable and taxable, this is just an information sharing agreement between HMRC and the apps, to stop people hiding it.

Even if they’re just enforcing it, why do we never see such measures taken against the tax dodging ultra rich?

 

[altodevil]

There's no new tax, it's also incredibly easy for traders and sellers to obscure total profit. This is just a scare tactic that is unlikely to result in anything concrete.

 

[altodevil]

Even if they’re just enforcing it, why do we never see such measures taken against the tax dodging ultra rich?

The answer is obvious, but it is beside the point.

 

[RedNome]

Say this was your only income, I'm guessing your personal allowance would still over ride this so you'd have to be earning over your threshhold?

 

[Sara125]

It would be tax on profit, not tax on the item sale price, no?

Edited title to reflect that

 

[Rado_N]

It would be tax on profit, not tax on the item sale price, no?

Yes. Profits over £1k are taxable.

Even if they’re just enforcing it, why do we never see such measures taken against the tax dodging ultra rich?

Measures are taken to tackle lots of such issues, but they don’t generate as many headlines and they’re often trickier to enforce.

The broader point of focus is as per @altodevil comment.

Say this was your only income, I'm guessing your personal allowance would still over ride this so you'd have to be earning over your threshhold?

Correct, the £1k allowance is an option to use instead of tracking actual expenses. You either deduct your costs to arrive at a profit, or you deduct £1k from your sales if it’s easier and more beneficial.

Once you arrive at a profit, it’s taxed as normal.

 

[P-Ro]

Oh no. Some people are going to start having to pay tax on their taxable income. I'm outraged.

 

[Skills]

Don't most people make a loss on these anyways?

 

[esmufc07]

There’s no change in what is taxable. They’re not “starting to tax” this income, it’s always been reportable and taxable, this is just an information sharing agreement between HMRC and the apps, to stop people hiding it.

You sound knowledgeable you should consider a career in tax.

 

[Rado_N]

You sound knowledgeable you should consider a career in tax.

20%

 

[P-Ro]

There's no new tax, it's also incredibly easy for traders and sellers to obscure total profit. This is just a scare tactic that is unlikely to result in anything concrete.

'Obscure' as in falsifying expenses? I mean sure if you want to commit fraud and put pen to paper. It's mostly targeting those who are trading but don't submit an ITSA. There's a huge psychological difference between not registering for SA and submitting a bogus tax return. It will catch out the people who are trading in the shadows. And if the trader knows that HMRC will be able to see their trading income from the platform then they have the choice of providing a legit or fraudulent tax return. Pretty sure most people will choose the former.

 

[Sparky Rhiwabon]

There is no change here, just more enforcement to make people pay the tax they should be paying

 

[Tarrou]

I don’t think they have resources to chase down this nickle and dime stuff

I wouldn’t bother declaring it if it was me, anyway

 

[Zen86]

Great, it’s about time they started getting their slice from the lower class tax dodgers on that circular economy.

 

[fergieisold]

Don't most people make a loss on these anyways?

This is what I don't get. Someone buys a coat in 2020 for 50£ and sells it in 2024 for 25£.

How is there any profit?

 

[Rado_N]

This is what I don't get. Someone buys a coat in 2020 for 50£ and sells it in 2024 for 25£.

How is there any profit?

There isn’t, thus they would pay no tax.

 

[fergieisold]

There isn’t, thus they would pay no tax.

Phew, thought I was going mad. Vinted is awesome. The less profit makers on there the better.

 

[maniak]

If I sell a jacket on vinted for 30 euros, how do they know if I made any profit? They're going to check the price of the jacket when I got it? I'm not seeing how they can enforce this.

 

[izec]

If I sell a jacket on vinted for 30 euros, how do they know if I made any profit? They're going to check the price of the jacket when I got it? I'm not seeing how they can enforce this.

They wont be checking this, since you are out of scope. They dont have the resources and frankly dont care about your coat. Nobody is going to look for 30 pounds obviously.

However, if you sell your Rolex watch for 20k, and it costs 13k, that is interesting for them.

 

[P-Ro]

It's quite obvious that this is targeting those people with hundreds/thousands of transactions a year who are flipping items and Airbnb landlords. If you're selling a few of your old possessions here and there it's almost certainly not trading income.

 

[Pogue Mahone]

If I sell a jacket on vinted for 30 euros, how do they know if I made any profit? They're going to check the price of the jacket when I got it? I'm not seeing how they can enforce this.

They rely on you being truthful. But in the unlikely event of you ever being audited the onus would be on you to keep records of what you earn/spend to prove your tax return was correct.

 

[langster]

If I sell a jacket on vinted for 30 euros, how do they know if I made any profit? They're going to check the price of the jacket when I got it? I'm not seeing how they can enforce this.

That's not how it works. It's a total of sales over a yearly tax period. (April to April)

It's not aimed at people just selling a few items here and there that they previously owned. It's aimed at those essentially running a small business. However, as mentioned above, it's nothing new. I ran an online vinyl store on eBay for 10 years or so and as all money was paid in to PayPal I had to file tax returns. Altjough I knew many other dealers that didn't.

 

[Pexbo]

20%

My man

 

[maniak]

OK, putting the silly jacked example aside.

I sell about 5k euros a year on vinted. But it's not a business, I collect sports cards, I open boxes, take the cards I want, trade a few and sell the rest. I probably break even on this, it's just a way to bankroll future purchases and get rid of the thousands of cards I end up with.

I'm not british but assuming the system is similar in portugal, how would one declare this? How would they know if I'm making profit or losing money? Occasionally I open a box that costs 100 euros and I'm lucky to resell the content for 20 euros. Other times that same box might have a valuable autograph that I sell for 300 euros or so.

So unless you're moving tens/hundreds of thousands of euros, I don't see how they can enforce it for small folk, even if they're making over 1k in profit.

 

[Murder on Zidane's Floor]

https://www.redcafe.net/threads/the-hypernormalisation-thread.458160/post-31511707

My thoughts.

Also let's be frank, cannot be enforced as you can't be taxed on a loss. So just show the purchase price and the sale price and et viola no taxes.

 

[Rams]

 

[F-Red]

OK, putting the silly jacked example aside.

I sell about 5k euros a year on vinted. But it's not a business, I collect sports cards, I open boxes, take the cards I want, trade a few and sell the rest. I probably break even on this, it's just a way to bankroll future purchases and get rid of the thousands of cards I end up with.

I'm not british but assuming the system is similar in portugal, how would one declare this? How would they know if I'm making profit or losing money? Occasionally I open a box that costs 100 euros and I'm lucky to resell the content for 20 euros. Other times that same box might have a valuable autograph that I sell for 300 euros or so.

So unless you're moving tens/hundreds of thousands of euros, I don't see how they can enforce it for small folk, even if they're making over 1k in profit.

In the UK? https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

 

[DavelinaJolie]

If you're concerned about selling your personal belongings, prob best to read this:

https://www.gov.uk/government/publi...eet/chattels-and-capital-gains-tax-2021-hs293

This change seems to be going after people essentially running a business through selling sites but not declaring, which is fair enough. Chucking stuff up on Vinted you bought from a charity shop with the intention of selling, yeah that's an income, kinda have to expect there'll be tax to pay when you over the £1k.

 

[Igor Drefljak]

They wont be checking this, since you are out of scope. They dont have the resources and frankly dont care about your coat. Nobody is going to look for 30 pounds obviously.

However, if you sell your Rolex watch for 20k, and it costs 13k, that is interesting for them.

Which they wont look at because there is a weird rule where you can sell watches at a profit and it doesn't matter

 

[izec]

Which they wont look at because there is a weird rule where you can sell watches at a profit and it doesn't matter

Depends on how many you sell. If you buy and sell like many collectors and make decent profit, they can deem it a business.

 

[langster]

OK, putting the silly jacked example aside.

I sell about 5k euros a year on vinted. But it's not a business, I collect sports cards, I open boxes, take the cards I want, trade a few and sell the rest. I probably break even on this, it's just a way to bankroll future purchases and get rid of the thousands of cards I end up with.

I'm not british but assuming the system is similar in portugal, how would one declare this? How would they know if I'm making profit or losing money? Occasionally I open a box that costs 100 euros and I'm lucky to resell the content for 20 euros. Other times that same box might have a valuable autograph that I sell for 300 euros or so.

So unless you're moving tens/hundreds of thousands of euros, I don't see how they can enforce it for small folk, even if they're making over 1k in profit.

It's a tough one, but basically if you are buying and selling online it is a business. Even if you think it's just a hobby, if it's providing any form of income above the threshold (£1k) then it's taxable income and should be declared.

If you are receiving cash payments it's easy to hide, but all electronic payments can be tracked, especially PayPal payments. PayPal will notify you when you receive a certain amount through them and will offer you a business account. PayPal and eBay both have dedicated systems where you can just download your accounts, ins and out etc. It's up to you if you declare it or not, however, not declaring it and being audited would be far more costly as heavy fines and penalties could be added.

It's a risk many take, but as mentioned by others, it's all dependent on if you are actually clearly running a business or if you are just selling off personal items. Ultimately those just selling a few things here and there shouldn't even have to worry, but it's still prudent to retain all receipts to have handy if needed. Those actually running a small business, well, you can either roll the dice and hope nobody ever says anything, or you can be honest and do it legitimately. If you do choose to do it legitimately, with clever accounting i.e. the expenses you submit, or taking in to account the VAT when pricing the items for sale you really wouldn't end up losing much, if anything at all. It's only people making relatively large sums of money that would ever need to be concerned.

As said a few times previously, this really isn't anything new at all and has always been the case. However, with the huge changes concerning electronic payments, it's definitely far riskier now than it was day when eBay and other online selling sites first became a viable way to make extra money.