do i have to pay tax on ebay?

Question

I have my own ebay shop, i dont make alot, on average it works out £200 per week, i dont work any where, i live off ebay.Do i need to pay tax on it?if so how much and how do i go about it?It also said on the tax site if i have been doing it for longer than 3 months than i can be fined, well i have, but i thought ebay covered tax in their fees so i dont want to own up if the b*stards are going to fine me for being honest.

im a seller not a buyer

i like that answer bobbyK :D

no, i didnt know i MUST which is why im asking,and i appreciate your answer, if i must pay it, i will, but may i add, that i know a guy who scrounges more off benefits than i make on ebay, and it feeds his drug habbit. Its all above board also, but people who earn **** all like me are expected to keep them. Ive been workin upto a week ago, and paying tax on that, i was paid thurs so paid my last bit of tax then.

no i dont claim benefits, although i think id be better off if i was, this country is sh*t

Answer 1

As of right now, neither Ebay nor the IRS has any way of tracking sales profits and losses. This is where the tax loop comes into play. There is no way to know what your profits on the items are because it could be something you owned and sold taking a loss, or it could be something you sold that you made 200% profit on. Taxation is completely up to you, there is no way (yet) to prove or disprove how much you actually made, therefore no way to enforce taxation. Some sellers work up financials and accounting reports and use these to prepare their "business" taxes. This makes sense if you are making $40,000 or more a year. But if you are making it a simple hobby or side income then I would not worry about it you will take a loss when you add taxes in after ebays outrageous fees......good luck.

Answer 2

Technically yes. If you have a shop and are selling goods for a profit then you are earning money and you should pay income tax on this and national insurance. You would need to request a tax return document from the Inland revenue. Probably best you emply a tax accountant to assist you with your first submital at least. If you declare your a company and register then you can get a bunch of reliefs so the tax you pay will be minimal. Thats if you want to be legitimate about it.

Answer 3

You are iin business for profit, so you need to register with HMRC within 3 months of starting. Although you may not be liable to tax, you will certainly need to pay Class 2 NIC's and you do this by quarterly DD. You pay tax on any profit over £5225. Tax on £6000 profit would be £77.50, not £1000. This will be payable on 31 July 2008. As a taxpayer on PAYE I find your remarks about having to give the government its due because 'its hard work' quite offensive.

Answer 4

My goodness, you have received some really bad answers.

For starters, an eBay shop is no different to a shop on the High Street, as far as tax is concerned. Your profits are a taxable source of income and as a self-employed person, you had an obligation to notify HMRC within 3 months following the month in which you commenced trading of that fact. The penalty for not notifying within that timeframe is £100.

Download booklet SE1 from http://www.hmrc.gov.uk/leaflets/se1.pdf and complete CWF1, which you'll find at the back. Send that, together with the completed Direct Debit application form to your local tax office. It will be dealt with quicker than if you send the forms to the Newcastle address given, as they are notoriously slow.

Your next step is contact a qualified accountant who will advise you what records to keep and how to keep them. It is money well spent and tax deductible.

HMRC are becoming more sophisticated in dealing with tax evaders and eBay is one of their current targets.

You mentioned honesty. I'm not sitting in judgement but by not declaring your income when you know you must, is not being honest. In addition, you are not paying your Class 2 NIC, yet will expect state benefits plus any tax not paid by you has to be paid by others to compensate. It is estimated that the 'Black Economy' puts at least 2p in the £ on the rate of income tax.

If your profits are £200 per week, ie. £10,000 per year, expect to pay about £800 in tax for the year. You may be entitled to capital allowances as well as relief for working from home, including tax relief on any mortgage interest, council tax etc.

Get an accountant, it'll be worth it and you'll sleep easier.

Answer 5

Work out how much on average you would earn in a year and check with the tax office...what the least amount of money you can earn in a year before you have to pay tax...I think you're probably just over it...but check anyway it's better than being landed with a fine you can't afford to pay.

Answer 6

If you get caught, you will get clobbered. Get onto your local tax office and talk to them. You couldn't pay tax to Ebay anyhow - taxes are only paid to HM Customs and Excise in one form or another.

Talk to them!! There is a selling limit you may not even reach before paying tax. Also if you are selling your own stuff, I don't think it applies. I guess if you are making £200 per week though you are buying to sell.

Apparently there are departments being created JUST to watch ebay sellers. Be careful.

Answer 7

Strictly speaking you should be filling out a self tax assessment form and paying tax that way, just like any self employed person.

But you dont have to pay it though ebay.

Be careful, as you could be shopped by someone to the inland revenue for tax dodging. Give your local inland revenue office a call and check it out with them :-)

Answer 8

As far as I'm aware you do have to pay.
a friend of mine who sells on eBay was audited.
By who? I'm not sure, but he had to prove the amount of the financial year was not enough to tax.
I think what you earn is enough to tax.
You're not claiming any benefits? cos if you are you will certainly loose these if you are caught

Answer 9

if it's your sole method of income as in, it's your job and you aren't just getting rid of a few things around the house then ya, you need to pay tax. read the ebay user agreement it talks about all that stuff.

Answer 10

You do have to pay taxes if you earn over a certain amount. Unfortunately, I don't know how much that amount is. I think it may be around $1000.00

Like what others have said, if you purchase something you do not pay taxes. However, if you are selling items you do have to pay once you reach a certain amount.