Whereas those who trade online for profit are considered to be self-employed and therefore required to fill in a self-employment form (which can be done online through the website), those who are selling the odd, unwanted gift or some personal possessions are unlikely to qualify as a trader.
Online traders are considered to be self-employed if they sell goods they buy and sell goods for financial gain. Self-employed traders are required to pay income tax and national insurance contributions as well as being registered for VAT.
However, traders of second-hand goods only pay VAT on the margin they make: in other words, they are required to pay VAT on the difference between the price they bought the goods for and the price they sold them for.
HM Revenue say that failing to register for VAT or keep records could lead to being charged VAT on the full value of the goods sold.
They also require dealers to register within three months of starting trading. Failure to do so could lead to a penalty.
The tax guide can be found at http://www.hmrc.gov.uk/findout
The Self-Employment Tax Helpline is 0845 915 4515.
New online tax guide for trade
A NEW tax guide for people who trade online has been launched on the Inland Revenue’s website.
