Readers may have spotted elsewhere warnings that eBay, Vinted, Etsy and other online trading platforms will be required under new regulations to share with HMRC detailed information on vendors.
Contrary to what some reports have implied, this does not mean that you can expect HMRC to come knocking to ask why you’ve not declared on your tax return the proceeds of selling your designer clothing, toys that the children have outgrown, furniture that no longer suits your remodelled home and so on. None of these things can ever give rise to a charge to income tax, for none amounts to trading: that is restricted to selling items which you purchased with the intention of resale.
Of course, it’s possible that sales of some items, if sold for more than their original cost, might in principle give rise to a charge to CGT: antiques spring to mind. But there are a number of reasons why, even then, a charge to CGT may be unlikely: inherited antiques will have been treated as acquired at their market value on death; some antiques may be ‘machinery’, gains on which are exempt from CGT; others may benefit from ‘chattel’ exemption; and modest chargeable gains are in any event likely to be covered by the annual CGT exempt amount (albeit that this has already dropped to £6,000 and falls to a measly £3,000 from 6 April).
No: the rules are aimed squarely at people undertaking trading activities through online platforms. Profits from such trading have always been taxable: all that is happening now is that HMRC are adding to the resources available to them to track them down.
Actually, it’s not strictly true to say that profits are always taxable: since 2017, there has been a ‘trading allowance’ of £1,000 to exclude the very smallest of traders from liability. But it’s important to appreciate that the £1,000 refers to turnover, not profit, so will be relevant mainly to small one-off (or, at most, ‘a few-off’) transactions.
That’s not to say that HMRC will be wholly uninterested in learning who is flogging their high-end designer gear online: after all, if you sell it, you must (usually) have had the funds to buy it in the first place, which has implications for your own financial profile.
It’s all part of a trend, of course: as we have said for a long time, you should assume that any piece of information which relates to your financial affairs (and much that doesn’t, at least directly) recorded anywhere against your name is either already in HMRC’s hands or is theirs for the asking. Joining the dots is a challenge, but now that Hector the Inspector (remember him?) is increasingly able to call upon the assistance of Guy the AI, it’s a challenge to which HMRC are rising.
Readers may have spotted elsewhere warnings that eBay, Vinted, Etsy and other online trading platforms will be required under new regulations to share with HMRC detailed information on vendors.
Contrary to what some reports have implied, this does not mean that you can expect HMRC to come knocking to ask why you’ve not declared on your tax return the proceeds of selling your designer clothing, toys that the children have outgrown, furniture that no longer suits your remodelled home and so on. None of these things can ever give rise to a charge to income tax, for none amounts to trading: that is restricted to selling items which you purchased with the intention of resale.
Of course, it’s possible that sales of some items, if sold for more than their original cost, might in principle give rise to a charge to CGT: antiques spring to mind. But there are a number of reasons why, even then, a charge to CGT may be unlikely: inherited antiques will have been treated as acquired at their market value on death; some antiques may be ‘machinery’, gains on which are exempt from CGT; others may benefit from ‘chattel’ exemption; and modest chargeable gains are in any event likely to be covered by the annual CGT exempt amount (albeit that this has already dropped to £6,000 and falls to a measly £3,000 from 6 April).
No: the rules are aimed squarely at people undertaking trading activities through online platforms. Profits from such trading have always been taxable: all that is happening now is that HMRC are adding to the resources available to them to track them down.
Actually, it’s not strictly true to say that profits are always taxable: since 2017, there has been a ‘trading allowance’ of £1,000 to exclude the very smallest of traders from liability. But it’s important to appreciate that the £1,000 refers to turnover, not profit, so will be relevant mainly to small one-off (or, at most, ‘a few-off’) transactions.
That’s not to say that HMRC will be wholly uninterested in learning who is flogging their high-end designer gear online: after all, if you sell it, you must (usually) have had the funds to buy it in the first place, which has implications for your own financial profile.
It’s all part of a trend, of course: as we have said for a long time, you should assume that any piece of information which relates to your financial affairs (and much that doesn’t, at least directly) recorded anywhere against your name is either already in HMRC’s hands or is theirs for the asking. Joining the dots is a challenge, but now that Hector the Inspector (remember him?) is increasingly able to call upon the assistance of Guy the AI, it’s a challenge to which HMRC are rising.
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