Folks, I'm in need of some advice prior to calling HMRC, like most I occasionally sell personal belongings on eBay & Amazon to free up some space and get some much needed pocket money. I've never exceeded the £1000 yearly trading allowance from HMRC (yet) because I've simply never taken it seriously as a supplementary income and because my partner tends to sell her share of our household items the allowance is effectively £2000 equally split between us. Recently I have looked at it as a way to make some extra cash with some prior thought, my partners parents make good supplementary incomes from eBay come car boot season to good effect but because her stepdad is self employed recording and declaring that income is straightforward alongside his business. I am however, employed with a yearly salary of just over £33k, I'm taxed PAYE monthly as you'd expect and I've had no experience of dealing with tax issues beyond the occasional letter for under/overpayment. I've recently sold a bunch of my old gear on eBay which included a collection of inexpensive aliexpress jewellery (bought in a ill thought out style impulse) and made just shy of £300, Car boot season is coming up and both me and my partner would like to have a crack at this whole reselling malarky to see if we can fund next years summer holiday! How do I go about keeping everything above board tax wise while being currently employed? Would registering as a sole-trader be most appropriate for this scenario? Because I'm currently paying tax PAYE on an existing income stream how would I go about detailing that in a tax return if this was a successful venture? To be clear, I'd envision this to be a £150-£200 NET monthly profit pocket money venture so won't be making mega money to push me up a tax bracket!
You'll need to register for self-assessment [iirc you'd need to register as a sole trader with el tax man as well]... that's how/where you declare anything above/over your PAYE earnings.
If in doubt phone them up. Anytime we've had any queries they have been extremely useful and friendly.
I'd say the same as @RedFlames. I'm a director of the family company i work for, and directors have to do SA too. I have no outside income, so it's annoying and more red tape. That said, if I do get into that situation, I can just add it in to the paperwork already on the go. Make sure you have a Unique Taxpayer Number (UTR), as that will be needed over and above your NI number IIRC.
I did a similar thing a few years ago. I registered myself as trading under the name of "Has Beard, Plays Games" and had to register for self-assessment. I never really did anything with it so that trading name always declared a nil return, but I also had to enter all my details from my main employment at the end of the year alongside the self-employed tax return. All my tax & NI was still deducted via PAYE, but I still had to enter all the totals in the annual self-assessment. For the most part it was pretty easy - everything you need is on your P60 and P11D (if you receive any benefits-in-kind).
Are you selling personal items you own or buying items to sell at a profit? If it's the former then it doesn't require registration. EDIT - helps if I read it properly. Registration for self employment is straight forward, you can be dual status without any hassle. Just keep records of everything.
Thanks guys, extremely helpful, I think I've managed to get my head around it all now! I'm going to put the wheels in motion this weekend in regards to registration and general record organisation
Sorry... further question for those who may know! If I register as self-employed this weekend. with the financial year coming to a close would I then be asked to submit a self assessment for the tax year April 2019-2020 because I've registered as self employed during that tax year all be it for a matter of weeks? Because I won't formally be trading and consequently making any profit until mid April early May if I was to hold of registering to be self employed until the new financial year then I should be expected to submit my first self assessment by the January 2022 deadline for the tax year April 2020-April 2021... correct?
Yup, but it'd be a quick job of just writing a lot of "0"s in various places. Yup. Something you need to know before going ahead, 'cos it's a royal pain in the back-bottom: payment on account. Basically, you pay your SA tax (which includes income tax and NI contributions) in two chunks, one in January and one in July - but you're paying for the *next* financial year, not the one that's just been. It basically doubles the tax you pay in the first year. Running the numbers: let's say you owe £3,000 in tax for your first financial year as a Sole Trader. You'd think you cut HMRC a cheque for £3,000 and you're done, right? WRONG. On the 31st of January 2022 (assuming you delay setting up Self Assessment until the next financial year) you'll be asked to pay £3,000 (the tax you owed for the financial year ended April 5th 2021, FY21) *and* £1,500 (half the sum again, representing a payment against expected tax in FY22) - making your first payment £4,500. *Then* you'll have to pay another £1,500 in July. What happens then is that your January 2023 payment includes another payment on account, based on your return from FY22, plus a "balancing payment" - the difference between what you paid on account for FY22 and what your SA return says you actually owed. If you owed £3,000 again that year, your balancing payment is £0; if you owed £2,000, you'll be rebated £1,000; if you owed £4,000, you'll have £1,000 extra to pay. It's a particular pain in the arse for your first year ('cos your first payment is 150% of what you thought you'd have to pay) and for your last year if you stop doing SA ('cos you still have to make the payment on account then wait for it to be refunded.) Thankfully, it'd only apply to you if you were doing particularly well: you only have to make a payment on account if you owe more than £1,000 for the last financial year (which would mean making around £3,500 profit from your resale activity) and the tax you owe via SA represents more than 20% of your overall tax bill. Assuming you keep your job and keep PAYE on that, you'll be paying more than 80% of your tax that way - meaning payment on account will never apply.
Aha, I'm glad I found that out sooner rather than later! - Would have had a bit of a shock finding it out come time to pay... Makes sense though, effectively keeping ahead of your projected tax bill! This also explains the "Amount owed to HMRC" using this handy dandy calculator https://www.employedandselfemployed.co.uk/tax-calculator Thanks Gareth!
If you're on PAYE & the amount you owe them isn't huge they can stick it on your tax code for you (to make it easier)
