More and more households are looking for extra ways to raise some extra tax in time for Christmas – EBay and car boot sales can be a good way to do this, but are there any tax implications?
The simple answer is, if you are only selling your unwanted possessions, you are unlikely to face a tax bill. If your pattern of selling suggests you are trading, or you are selling items which may attract capital gains, there may be some tax to pay.
So how do you know when you are trading?
You are trading if you:
- Sell goods you have bought for resale.
- Make items yourself and sell them to make profit.
- Sell or buy items on behalf of others for financial gain (e.g. for a commission).
- Provide a service and receive payment (whether in cash or kind).
If any of these statements are applicable to you, you should seek professional advice. If you are trading, you may have to pay income tax and National Insurance Contributions (NICs). You may also need to register for value added tax (VAT). Failure to comply on a timely basis can lead so some hefty fines.
You are not trading if you:
- Sell occasionally, unwanted personal items through internet auctions or classified advertisements.
- Attend a car boot sale once or twice a year to sell unwanted household items.
If you feel you are affected by this topic and would like to talk it through with a professional, please contact us for a free initial consultation.