How much can you sell online without paying tax?
06th June 2016
Generally, just selling a few things on eBay or Etsy won't mean you have to pay extra tax. However, doing it regularly enough could count as running a business, even if you already have a job. In that case you'll need to file a Self Assessment tax return and pay tax on the money you're making.
Does my online selling count as a business?
This can be a tricky question. Selling off unwanted possessions might not feel like running a business to you. The taxman might take a different view, though. You might be making things as a hobby and selling them to clear some space. If you're doing enough of it, though, HMRC's going to expect a Self Assessment Tax Return from you.
The problem is there aren't really any clear-cut rules about what counts. You might call it "occasional extra pocket money", while the taxman prefers the term "Sole Trader business." If you disagree with HMRC, guess who gets their way and who gets stuck with the tax bill?
Here are a few questions to ask yourself:
- Are you buying or making things specifically to sell them?
- Are you selling things just to get rid of them, or specifically to make money?
- How often or regularly are you selling things online?
What it boils down to is whether you're treating it like a business or not, or making regular money from it. If you're not sure whether what you're doing counts, talk to RIFT to see where you stand.
If I don't mention it to the Taxman, won't he just ignore me?
Running a business without telling HMRC is an incredibly bad idea. Seriously - don't even think about trying this. If there's even the slightest chance that what you're doing should be taxed, get in touch with RIFT. We'll show you how to stay in HMRC's good books without paying more than you need to.
How do I declare the money I'm making online?
Even if you're not strictly running a business, you may still have to tell the taxman about the money you're making. Remember that working PAYE doesn't mean you can hide any extra income you've got from HMRC.
If you're making enough, or making it regularly enough, that you need to declare the money, here's what you do:
- Register for Self Assessment: you can do this online at the HMRC site. You'll get a Unique Taxpayer Reference number and an activation code for your Government Gateway account.
- Keep your paperwork: you need records of all the money you've got coming in and going out.
- File a Self Assessment tax return each year: you can do this online or on paper.
Can I get help with my tax return?
Definitely! Whether you're unsure if you have to file a tax return or need help actually doing it, give RIFT a shout. We've been solving people's HMRC problems since 1999, and no one knows the tax game like us. Just get in touch and we'll tell you what the score is.
If you need any help with your self assessment tax returns, or if you have any questions then get in touch now on 01233 628648, talking to us on LiveChat, joining us on Facebook, or get a quote for our Tax Return Service using our tax return calculator - remember it's not only for the self employed.