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By *litterbabe OP Woman
over a year ago
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I understand that there's a relatively new threshold of £1,000 that you can turnover annually before you need to pay tax, to cover things like selling on Facebook marketplace and eBay.
The seems a little unfair to me though, for example I can earn my wages, pay tax and buy a sofa, use it for a few years and resell it.
If I sell it for more than £1,000 I have to pay tax on the difference, and have already paid tax on the money that I bought it within the first place.
(The sofa is only for example, it could be reselling furniture I no longer needed or anything, the point is the thousand pound threshold then paying tax via self assessment on any turnover above that) |
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By (user no longer on site)
over a year ago
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I'm not an expert but I think you have that wrong. You pay tax on capital gains. If you buy a sofa then sell it some time later at a lower price you haven't created a capital gain so you won't pay tax on it. You could buy a sofa for £2000 then sell it for £1250 and you wouldn't have to pay tax on that as you have a capital loss of £2750. However, if you bought a sofa for £1000 and sold it for £1250 you then have a capital gain of £250. Do that 5 times and you have to pay tax the 5th time (assuming what you said about the £1000 allowance is correct.
Mr |
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By (user no longer on site)
over a year ago
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"I'm not an expert but I think you have that wrong. You pay tax on capital gains. If you buy a sofa then sell it some time later at a lower price you haven't created a capital gain so you won't pay tax on it. You could buy a sofa for £2000 then sell it for £1250 and you wouldn't have to pay tax on that as you have a capital loss of £2750. However, if you bought a sofa for £1000 and sold it for £1250 you then have a capital gain of £250. Do that 5 times and you have to pay tax the 5th time (assuming what you said about the £1000 allowance is correct.
Mr"
 all of this for selling items that could be regarded as assets (chattels)
what the tax the OP is talking about is actually aimed at is your home business sellers, things like etsy or using facebook to sell your crafts or baking etc, they are basically giving you an allowance where you can make some money off a hobby without the added admin & complications of making if an official business recorded as self employed income on a tax return |
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By *litterbabe OP Woman
over a year ago
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"I'm not an expert but I think you have that wrong. You pay tax on capital gains. If you buy a sofa then sell it some time later at a lower price you haven't created a capital gain so you won't pay tax on it. You could buy a sofa for £2000 then sell it for £1250 and you wouldn't have to pay tax on that as you have a capital loss of £2750. However, if you bought a sofa for £1000 and sold it for £1250 you then have a capital gain of £250. Do that 5 times and you have to pay tax the 5th time (assuming what you said about the £1000 allowance is correct.
Mr
all of this for selling items that could be regarded as assets (chattels)
what the tax the OP is talking about is actually aimed at is your home business sellers, things like etsy or using facebook to sell your crafts or baking etc, they are basically giving you an allowance where you can make some money off a hobby without the added admin & complications of making if an official business recorded as self employed income on a tax return "
If I'm wrong and you're right then that makes a lot more sense.
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Sounds like a general online sales tax for any business (small or large). I doubt selling the odd personal item, like a sofa, would qualify:
https://www.theguardian.com/business/2021/feb/07/online-sales-tax-aims-to-shift-balance-as-uk-high-streets-struggle |
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By (user no longer on site)
over a year ago
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"I'm not an expert but I think you have that wrong. You pay tax on capital gains. If you buy a sofa then sell it some time later at a lower price you haven't created a capital gain so you won't pay tax on it. You could buy a sofa for £2000 then sell it for £1250 and you wouldn't have to pay tax on that as you have a capital loss of £2750. However, if you bought a sofa for £1000 and sold it for £1250 you then have a capital gain of £250. Do that 5 times and you have to pay tax the 5th time (assuming what you said about the £1000 allowance is correct.
Mr
all of this for selling items that could be regarded as assets (chattels)
what the tax the OP is talking about is actually aimed at is your home business sellers, things like etsy or using facebook to sell your crafts or baking etc, they are basically giving you an allowance where you can make some money off a hobby without the added admin & complications of making if an official business recorded as self employed income on a tax return
If I'm wrong and you're right then that makes a lot more sense.
"
oh and the capital gains tax refers to personal possessions sold (so for example the couch) but they have to be sold for over £6000, you have to make a profit and the first £12,300 profit for most people is free (with exception of your possessions being land or buildings or sold cheap to family late in life to try avoid inheritance tax)
the £1000 tax free trading allowance is not profit, its a sales value you can take advantage of to stop you even having to declare it, if you go over £1000 you can either take the choice to just deduct £1000 and pay tax on the value of everything else you sold, or you can forfeit the allowance and instead work out the sales price less allowable expenses and pay tax on what is left
.gov website has a yes / no test you can go through to work out when you might need to declare on self assessment form |
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