Recently the trend to sell goods online has increased. Some people are opting for selling online as a means of earning an additional income. Naturally questions arise as to whether or not this income should be declared on tax returns.
Simply selling your own unwanted goods on an Internet auction site would normally mean there would be no need to declare it. Nevertheless there are exceptions to the rules that you should be aware of.
People who are merely selling unwanted gifts or old household ornaments items should be OK. Most of these people will be covered by either the chattels rule or the annual capital gains tax exemption rule.
More frequent traders will need to answer the following questions before deciding whether or not items should be entered on tax returns.
- Is there an intention to make a profit?
- Are the transactions similar to those in an existing trade being carried out by the seller?
- Are the sales typical to that of a trading organisation?
- Are the items are bought and sold in a short space of time.
- Are the items bought with the intention of selling it?
If the answer is yes to any of the above then it is likely you could be perceived as being a trader. HMRC would therefore expect that online income should be entered on tax returns.
However, if there is any uncertainty about what you are doing then you should seek professional advice.
Yorkshire Accountancy have vast experience of Ebay businesses as well as ALL online businesses. We deal with lots of such clients. If you wanted any assistance please Contact Us.