The phenomenal success of auction sites such
as eBay means that a huge number of people are now earning some
money by selling items online. Most of those people, though, are
simply selling second-hand items for a very small amount of money,
and probably do not have to pay tax on those earnings.
"If you qualify as a non-trader, this means
you are not buying and selling goods online with the intention of
making a profit," says the guide from HM Revenue and Customs. "Are
you selling unwanted presents? Do you occasionally sell
personal items, such as old vinyl records or a sofa?"
"As long as you are not buying goods with the
intention of selling them at a profit, you are not regarded as a
trader," it says. "This means you do not have to notify us and
declare the income on your tax return."
Some people will qualify as e-traders, though,
according to the guidance. "You are trading if: you sell goods that
you bought for resale; you make items yourself and sell them,
intending to make a profit; you sell or buy goods for other people
and receive money for this (for example on commission), or you
provide a service and receive payment (in cash or in kind)," says
the guide.
"If you are trading online you will be
regarded as self-employed for this trade and you must register with
us and possibly complete a tax return," it says.
HMRC's director of risk and intelligence
Stuart Hartlib said that sellers should also keep an eye on whether
or not they should be paying capital gains tax. "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," said Hartlib.
"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," he said.
Not everyone who counts as a trader will be
aware of their status, said the guide. "You may be self-employed
and do not realise it. If you are self-employed, you must register
to let us know within three months of starting your business, or
you could pay a penalty. It's the law," it said.
