A simple Guide on Tax and Vat Responsibilities for EBay

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Hope this is Helpful! I have tried to Keep it Simple, Goodluck with the New Venture.

Assuming your supplier is VAT registered, you buy item A at 85p + VAT, total cost to you is £1.00

If you are VAT registered you claim back the 15p VAT

You sell item A for £2.00.  If you are NOT Vat registered, that's it.  If you are VAT registered you have 2 choices:

a) You add 17½% to the £2 (35p) and pay that to the VAT man. OR
b) You pay the VAT out of the £2 - ie sell for £1.70 + 30p Vat - and pay the 30p to the VAT man.

Of course, if you are VAT registered but your supplier isn't then you can't claim back the VAT because technically you haven't paid any even if the item still costs you £1.

That is the VAT element dealt with.  In addition to that you will have to pay income tax at whatever your normal rate is.  This is based on the years worth of transactions, but based on our example above it could be as follows:

IF VAT REGISTERED
Cost of goods 85p, eBay listing fee* 18p, paypal fees 20p other costs 20p.  Total cost £1.43.  Selling price £1.70.  Profit 27p.  Tax (@ 20%?) 5.2p

ALTERNATIVELY, if NOT registered
Cost of goods 1.00, eBay listing fee 20p, paypal fees 20p other costs 20p. Total cost £1.60. Selling price £2.00. Profit 40p. Tax (@ 20%?) 8p

Get it Now? Good!

Best Wishes

Gwylym.

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