08 September 2014
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Warning for eBay toy traders to pay tax
Could you potentially be selling collectable toys online illegally? ...
Warning for eBay toy traders to pay tax Images
Regular eBay dealers have been warned to make sure they're declaring their income to HMRC after one trader was sentenced to two years in jail for failing to pay tax on more than 500,000 DVDs, music and video games he sold on the website.
Although this was an extreme case, it has highlighted the need for sellers to declare their earnings or potentially face the wrath of the law. Over the years eBay has become an extremely popular (and potentially profitable) way to sell vintage toys… but how many people are ensuring they declare any profits they make on the items they sell?
Almost every week, you can see Corgi cars, old board games and model railways exchanging hands on eBay and most items are sold by individuals looking to make a bit of cash from items they've previously bought - then potentially use the cash to buy more collectables.
But among those sellers, there are dozens of sole traders who are using the website to supplement their income by trading in old toys. It is the responsibility of those traders to disclose their earnings and pay the correct amount of tax. Yes, the odd £50 here and there for a Dinky might not seem that much but add it up over the course of the year and you could be looking at quite a serious amount of cash.
So, how can you tell if you should be paying tax on the items you're selling on eBay? Well, the easiest answer is to look how regularly you're selling and what you're selling. If every few months you decide your collection needs thinning out slightly and pop some of your collectables on eBay in the hope of recouping some of the money you initially laid out for them, then it's highly unlikely you'll need to pay tax.
However, if you're scouring the car boots/toy fairs every week for bargains and then regularly selling these online in the hope to make a profit, then you could be classed as trading and be required to pay tax.
If you're not sure, the HMRC does include a few basic examples of traders/non-traders on its website. But basically it boils down to this… if you're trying to make a profit on vintage toys, then make sure you're doing it legally.
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Although this was an extreme case, it has highlighted the need for sellers to declare their earnings or potentially face the wrath of the law. Over the years eBay has become an extremely popular (and potentially profitable) way to sell vintage toys… but how many people are ensuring they declare any profits they make on the items they sell?
Almost every week, you can see Corgi cars, old board games and model railways exchanging hands on eBay and most items are sold by individuals looking to make a bit of cash from items they've previously bought - then potentially use the cash to buy more collectables.
But among those sellers, there are dozens of sole traders who are using the website to supplement their income by trading in old toys. It is the responsibility of those traders to disclose their earnings and pay the correct amount of tax. Yes, the odd £50 here and there for a Dinky might not seem that much but add it up over the course of the year and you could be looking at quite a serious amount of cash.
So, how can you tell if you should be paying tax on the items you're selling on eBay? Well, the easiest answer is to look how regularly you're selling and what you're selling. If every few months you decide your collection needs thinning out slightly and pop some of your collectables on eBay in the hope of recouping some of the money you initially laid out for them, then it's highly unlikely you'll need to pay tax.
However, if you're scouring the car boots/toy fairs every week for bargains and then regularly selling these online in the hope to make a profit, then you could be classed as trading and be required to pay tax.
If you're not sure, the HMRC does include a few basic examples of traders/non-traders on its website. But basically it boils down to this… if you're trying to make a profit on vintage toys, then make sure you're doing it legally.
Remember, to get the latest collecting news delivered direct to your inbox every two weeks, sign up for our e-newsletter.
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