eBay, Self-Employment & the Tax Man

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This guide is written to assist those whom are unsure as to their status with regards the Inland Revenue.

If you are selling personal possessions you are not liable to pay tax to the tax man on monies that are made from selling.

However, if you are buying to sell any profit that you make is liable for tax and Class 1 National Insurance.

If you decide that you wish to sell on eBay to create an income and procure items from an outside source this classes you as a Business Seller and as such your profit is liable for tax.

In the first instance you must register with the Inland Revenue within 3 months of trading, as self-employed.

You have to keep accurate records as to what your income and expenditure is, this includes receipts, PayPal and eBay records.

Profit is the money you make after you have paid out for the item you are selling, listing fees, PayPal fees, postage costs, stationary costs.

Tax years run from April 5th to April 4th of the following year, the return from any one year is due to the Inland Revenue at the latest 31st January of the following year, e.g April 5th 2007 to April 4th 2008 tax is due on this financial year no later than 31st January 2009.

Some use the services of an Accountant/Book-Keeper to keep accurate records, however Excel spreadsheets will give you the same information specifically useful if you are a small seller with a turnover of less than 50k.

The current Inland Revenue Tax Rates are as follows;


The PAYE thresholds (the level of earnings at which tax becomes payable) are

£100.00 Weekly

£435.00 Monthly

Taxable Rates

Starting rate 10% up to 2,230.00

Basic Rate 22% from 2,231.00 to 34,600.00

Higher Rate 40% over 34,600.00

Therefore, you can earn 100.00 per week profit before you are liable for tax, remember that any earnings from elsewhere are added to those from eBay to calculate your tax liability.

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