Taxes are an important part of any business. Unpaid taxes could lead to serious and strict legal actions against you. However, there are some more complications when it comes to taxations the practice of selling items online.
Now, you are not basically liable to pay tax on the small things you sell on eBay, Etsy, or any other online platform. Additionally, even if you have a job and occasionally sell things online, even then you will not be liable to pay your taxes.
However, you will be required to pay for taxes as per your income from such practices if you do business out of selling things online. Whether you are making losses or profits in your online selling business, as long as you are selling things online with the intention to earn a profit, you will be required to pay taxes and submit Self-Assessment to the authorities.
Related Links:
Selling Online Through eBay – Tax Implications
Selling Online Through Amazon – Tax Implications
Although ascertain whether your business is counted as a business or not is a tough nut to crack, here are some basic questions you need to ask yourself while wondering whether you have a business or not:
There are some kinds of services that can be rendered online and still fall in the ambit of being taxed, here they are:
Although all these additional services do not count as businesses, they are referred to as ‘sharing economy’ or ‘peer-to-peer’ and are taxable.
Whatever your business or income may be, you do not pay taxes until you go over the limit of allowances. You are free of taxes and other liabilities as long as your income falls among the tax-free allowances. But once you cross the tax-free allowance zone, you will have to pay the tax.
Also, if in the coming year you still fall under the tax-allowance zone, remember that you will not have to pay the tax.
Taxes on selling objects or items online is limited to the kind of practice you take up. As long as your work or selling of products is not a business and happens only at some times or occasionally, you will not be required to pay taxes at all.
Selling products online without the intention to make profits or gains are not taxable. Furthermore, the frequency of your selling activities also helps in deciding how much tax you need to pay.
However, if you are liable for Capital Gains Tax, you may have to pay that too, depending on your circumstance.
You can pay income tax for your online selling activities as other taxes without any problems. You will need to fill out the self-assessment form and submit it to the HMRC as per their requirements.
Other than this, companies such as eBay, help you generate and submit your self-assessment form directly from the website itself.
In this form, you will need to specify your income for the year and submit your tax return as per your income.
Any questions? Schedule a call with one of our experts.
Sumit Agarwal Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.
Invalid value
You are responsible for submitting your tax return to HMRC once a
You may have considered purchasing property through your business if
Whether you prefer to meet and speak over the internet, or if you prefer an in person conversation we can help you with your preference.
Stay up-to-date with the latest news affecting small businesses, get business tips and tax saving advice.
From starting a limited company to tax efficiency tips, we've a range of business guides for you to download and keep.
Our experts will work with you to reduce your corporation, personal or any other tax liability, all within the rules of the UK tax legislations. We’ll ensure you’re claiming all allowances and expense claims that you would be elegible for.
We give free software to all of our clients. You’ll be able to raise sales invoices, snap pictures of receipts and be MTD compliant with ease. You can even manage your business anywhere there’s an internet connection, thanks to our mobile app!
Successful business owners are those that are on top of their numbers. Businesses are driven by the numbers behind them. If you’re not reviewing your profit & loss or balance sheet regularly, how would you know how your business has performed and how would you make proper business decisions? We can help you make sense of your numbers.
Limited time only!
Say Goodbye to Bookkeeping Hassles: Nomi offers Free Receipt Processing and big savings!