Does anyone know where you stand if you do a car boot sale with regard to how much tax you should pay or don't pay?

I have had friends tell me all sorts of stories but I need to know what is true.

I do stand some car boots but not regular, and just wondered where I stand in regard to Tax.

Does anyone know.

I'm not certain, but i think if you buy stuff to sell, then you should pay tax on the income, but if you just sell something you've got then you don't. I think it depends on whether it's classed as part of your income or not...?

Sorry i can't be clearer, hopefully someone else can help more, or try searching ebay help stuff, i imagine similar rules apply in regards to income tax.

-PK-

Thta's my understanding - if you buy to sell you pay tax on your profits, just like you would if you were running a shop.

I sell on ebay and that's how I manage my tax issues - if I sell stuff that I've made or bought for selling, OR if it's something that was once part of my business - like an old piece of computer kit that I've claimed tax back on - then it goes in the books for me to pay tax on.

Joe

When you say "claimed tax back" do you mean VAT? So you bought a (e.g.) new hard drive for £100, claimed back VAT of £17.50, then when you sold it for £40, paid income tax of about £10?

I know how my tax works and that's about it. I understood it for long enough once to put all the formulas into MS Works, now it's all worked out for me.. I think.

-PK-

Well as for VAT i very much doubt you are reaching the required threshold to be charging VAT.

Whether or not you VAT Registered or not if the goods you sell are taxable at either zero rate or standard rate, they are taxable supplies. If you are trading in VAT Exempt supplies only, then i do not believe you have to be VAT Registered. If you trade mainly or soley in zero rate supplies then you do have to be VAT registered, but you can apply for exemption through HMCE.

Now if you are not exempt from VAT, then you MUST register for VAT as soon as your turnover reaches the threshold specified by HMCE, i think its is currently £58000 in a year, however it should be noted that this is a ROLLING YEAR not a calendar year, so everymonth you would need to check to see if you have hit the threshold in the previous 12 months.

In order to un register for VAT you must go down to £56000, again in a rolling year.

Ebayers will be slightly different as there registration threshold is about 70k because they are distance sellers.

You must register within 30 days of hitting the limit or you will be penalised.

I know this isnt you precise question but for the sake of other users this is how VAT is supposed to work,

Company A manufactures a wotsit which is a standard rate good, anf sells it to Company B for £50 + VAT of £8.75 = £58.75
Company A pays £8.75 to the VAT man and keeps £50 for himself.

Company B is also a VAT registered trader, he reclaims the £8.75 back from the VAT man, and records the wotsit on his books at a value of £50.

Person C comes along and wants to buy the Wotsit from Company B at a price of £88.13 (£75 + 13.13 VAT)

Person C is not VAT Registered as he is a consumer. Therefore when Company B pays the £13.13 they have charged over to the VAT man Person C will not reclaim it, so the VAT man always gets the VAT on the final selling price.


It does get a little more complex seeing as though Company A wouldnt pay £8.75 to the VAT man he would actually pay £8.75 less the VAT he paid out to purchase the raw material, and Company B would only pay over 13.13 - 8.75. This was the VAT man is getting something from every sale, and if you do the maths he will always get exactly the same amount.



Just in addition to the above and slightly more on topic, the revenue has clocked onto ebay traders, and how easy it is to defraud the tax man, and despite others opinions if you are selling on ebay you are earning money and you should pay income tax on it, if you dont you are defrauding the system and the rest of us tax payers.

So i expect to see changes in regulation and probably the IR will be taking a % cut of every sale on ebay, ontop of ebays charge.

Thats what i think anyway, cant think of an easier way for them to do it. However how does the IR know what profit you are making on a sale.


Obviously the above thresholds and regulations should not be taken as they are here, and you should speak to your local tax office, who are generally very helpful.

Remember you are better talking to the tax office and getting thinks right, than making assumptions and getting nobbled. They will be a lot more helpful if you contact them as opose to them tracking you down

Thankyou all for your advice. I have been to the Inland Revenue today and picked up some leaflets You do have to pay Tax on money you make from selling items even if they are second hand.

But does anyone know how much you are actually allowed to earn in a tax year when you go self employed?

You would need to complete a self assesment form, youve seen the "tax doesnt have to be taxing" adverts, you can do it online aswell, so i imagine you just plug the figures in.

If you are in full time employment chances are you already get your tax free and 10% allowances, and are into the 22% tax band.

In which case you would be taxed at 22%, untill you earn over 31k and you would then go onto have the excess taxed at 40%

soo in simple terms if you earn a salary of £27k PA you will be using up your tax free and 10% allowances fully

so your tax would be broken down like so
4615 at 0%
2020 at 10%
20365 at 22%

now if you then went on ebay and earnt yourself £15k in the tax year you would go over the £31400 threshhold for the 22% band and the excess would be taxed at 40%
meaning

4615 at 0% (tax free allowance)
2020 at 10%
31400 at 22%
3965 at 40%

Its this surplus £15k that you would have to fill out a self assessment form for since your employer wouldnt be declaring it / deducting / paying to the revenue for you (PAYE)

And what rate it is paid at is governed by what you have actually earned in total for the year.

If you do go self employed get yourself a good accountant, they will be able to often save you more than they charge

Dont forget you also have NI to pay, which is usually a flat 11%, but if your self employed you pay at a different rate, theres also NI exemptions i think if you are the director of a company. And i think you can also apply for exemption if your Net Profit is below a certian level.

Hope that helps



Just an extra note, anything you sell on ebay you are making a profit on, and therefore is taxable. I imagine a blind eye is turned for the casual user who has sold the odd old cd for a fiver. But like i say the government has latched onto people trading on ebay and not paying tax on the income.

Thankyou again for the information it is very useful.

It's a mind field with all the figures and everything!!!!

Thanks.

just a quick addendum.
tax is paid on all earnings at base rate level i.e 20% once you have gone over the single persons allowance which is about £450 per month.all "income" however derived attracts tax.
& don't get me started on capital gains & inheritance tax issues.