Do I need to pay tax when I sell PCs on eBay and Facebook market?

[gracemercy2017]

@christismyking OK I see

 

[studythebiblenotthesermon]

@hoahtx Wrong, it's 20%

 

[hoahtx]

@studythebiblenotthesermon I should have been clearer, 29% includes National Insurance

 

[studythebiblenotthesermon]

@hoahtx NI is 10% reduced from 12% as of January the 6th this year.

 

[hoahtx]

@studythebiblenotthesermon That is class 1 national insurance for employees, self-employed people pay class 4 national insurance which is 9% for 2023-24

 

[davidarts68]

@landonnate Then you don't need to pay anything. You have an annual allowance right now of £12,570.

Income below this threshold is tax free.

 

[macbashfeed]

@landonnate You need to report income above 1k via a "self assessment". This should be easy, but you may want to ask your parents for help.

You will only need to pay tax if your income exceeds the tax free allowance of just around 12k. You seem a long way off that so you're all good.

If you did start earning more from this, I'd recommend registering as self employed. You can then note down expenses like cost of materials, these will be deductable from your income and reduce the amount of tax you'd be liable to pay. But you're a long a way off that.

If you need specific advice, you'll either want to consult the gov.uk pages, or speak to a professional. Reddit can help to this extent, but we're not accounts, or at least not your accountants. It's on you to make sure you file, and that you file correctly. The self assessment should be very straightforward though, it's designed to be simple and easy!

 

[mjmichaels]

@landonnate

• you will need to register for a self assessment and pay tax on any income over your tax free allowance (~£12k so you have said you are a while away from that)
• you get £1000 per tax year as an initial buffer - you only need to report if you earn more than this amount in a tax year (April 6 to April 5th, so depending on when you started you may find you don’t need to worry at all until next tax year)
• you may find the platform you use reports the information to HMRC so don’t try to skip out on doing a self assessment if you need to do one
• once registered for a self assessment if you stop trading you will need to tell HMRC so they stop making you complete self assessments
• self assessment tax returns may see scary but are quite straightforward. If you need help ask a trusted adult though.

 

[resjudicata]

@landonnate Hmm I am an accountant and I see posts like this often, decided to make a burner account to at least tell people what to do.

I'm not your licensed accountant so just a disclosure.

"I am not your licensed accountant any advice I give is purely based on speculation on the information provided, and is best for you to liaise with a licensed accountant, either chartered or licensed."

Yes, if your turnover (gross income before expenses) exceeds £1,000 you must register for a personal tax return.

Keep a list of your expenses, total income and total expenses needed for your business.

I would also recommend to keep it separate from your personal bank account such as using Mettle (natwest online bank account free for self employed businesses, and can only be used if your self employed business is less than 50k per annum)

I would also recommend a software to keep your bookkeeping on for example free agent, as hmrc is making tax digital in the coming years so best to be ahead (you can also submit your tax returns via this software yourself) just make sure you have someone to review the work done, someone that knows bookkeeping at least to make sure everything is correct.

If your total profit (turnover minus expenses) exceeds the threshold you will pay tax and or national insurance depending if you have other income totaling and exceeding the annual allowance.

Again I would recommend to speak with a licensed accountant and submit a tax return, each tax year is based from 1st April to 31st March and is normally due by the end of 31st January the following year. e.g. 2022-23 period is 1st April 2022 - 31st March 2023 and due by the 31st January 2024.

 

[goodward]

@landonnate You would need to complete a self assessment, you may or may not have tax to pay depending on your circumstances

 

[imsavedbyjesus]

@landonnate I saw a thing from HMRC about this saying no you don’t

 

[spreadinglove]

@imsavedbyjesus It's a trade (not disposal of assets) over £1k revenue, he does.

 

[landonnate]

@spreadinglove So I will pay tax?

 

[parentof2boys]

@landonnate No tax as your profit is below your personal allowance. Class 2 NI is voluntary though since your profits are under £6725 - worth noting that Class 2 is going to be scrapped next tax year.

 

[wrtavares]

@landonnate No.

 

[iknowhes4real]

@landonnate Go on gov.uk and read about personal tax allowance

 

[resjudicata]

@spreadinglove It’s not necessarily a trade. It’s trivial income, plenty of people make more than that a year just selling random shit on eBay. HMRC truly won’t give a toss.

 

[spreadinglove]

@resjudicata HMRC (probably) won't care, but it hits 8 of the 9 badges of trade, so it's pretty clearly a trade, and is above the UK designated trivial amount of £1,000. There's no tax due so why not do it properly?

 

[resjudicata]

@spreadinglove Because it’s a waste of your time and theirs. In my experience if you ask them to submit a tax return they will ask you not to. And you can’t possibly judge all the badges of trade from the limited information in the post. And I’m a chartered tax adviser and worked in tax for the Big 4 for over ten years so I’m not entirely clueless about this stuff.

 

[spreadinglove]

@resjudicata Fair enough on the first bit, I've broadly stayed away from tax bar the ACA tax exams.

However you can make a high level assessment on the badges of trade and unless something unusual is happening, they hit most of them - and per HMRC's own website tool it says they still should declare.