Money
Making money
Tax on your eBay profits
The Revenue is warning people who make money buying and selling things online, for example with the auction site eBay, that they may have to pay tax on their profits, writes Paul Lewis
According to eBay, some 15 million people in the UK are registered users and about 48,000 make a substantial part of their living from it. But as that hobby grows into a business it is easy to forget that tax may be due. The same rules apply to anyone who buys and sells for a profit - whether it's through car boot sales or the local paper.
If you are just disposing of your own things or unwanted Christmas presents then you are not a trader and need not worry. But if you buy things in order to sell them or you make items specifically to sell, then you are trading and tax may be due. It does not matter how little you make from trading you still have to tell the Revenue and may have to pay tax.
Step 1 is to register as self-employed. If you do not do that within three months of starting to trade there is a penalty of £100.
Step 2 is to consider if you have to pay National Insurance. Class 2 contributions are £2.20 a week. But you do not have to pay them if you are over pension age (65 for a man or 60 for a woman) or you earn less than £4,635 a year from your trading.
Step 3, you will be sent a self-assessment tax return and will have to fill it in and pay any tax that is due.
