Ebay&Working tax credits!?

Question

Hi,
I am thinking of buying in certain toy kits and hand painting them which is quite detailed and time consuming, I reckon 1 kit would take 4-6 hours hopefully returning profit around £10-20. I am looking to sell on ebay, few questions, do I have to have a ebay business or can I just sell on private account? Does this count as self employed so I can claim working tax credits and how do I prove the hours I am spending doing this? What if I dont return a profit is it still viable to claim wtc? Im looking to come off benefits but need to be able to afford to. Thanks, Rich.

Answer 1

Your first question: Do I have to have an ebay business?



Well no you can sell your kits in whatever way you wish but ebay gives you a perfect platform to market your goods without having to have a shop. You could try to sell them online via another website: ebay is just one of them.



Your second question: Does this count as self-employed?



If you are buying in kits and selling them then yes this is considered trading. If you do not set up a limited company you are then considered to be self-employed. You need to register for tax with HMRC and tell them you are self employed. You will start paying class 2 national insurance contributions at a flat rate of £2.65 per week and then class 4 at 9 % of your pofit if it is above the £7,605 per year. You also pay income tax at 20 % if your profit uses up your personal allowance.of £9,440.



Working Tax Credits



You would have to certify to HMRC how much work you put in to your business. If you are trading online and your volume of sales is small HMRC would take a lot of convincing this was a full time occupation, but you may be able to convince them you are doing the minimum of 16 hours work a week. I would suggest you keep a log of your working hours in case of a query and be able to prove what you were doing during that time.



What if I dont return a profit?



Well this doesn't matter. It is the same as a plumber who doesn't make enough money to pay for his tools and van. You would still qualify for working tax credits unless your earnings go above a certain amount. You need to keep HMRC informed and they will adjust the amount they pay you.



I hope this helps and good luck!

Answer 2

Modern Man has gone over most points.



But don't worry, you have to make a profit, Inland Revenue is not interested in turnover no matter how high if you are making a loss, they are only interested in profit, and if you make a profit, any purchases to keep your Business running are Tax deductible, it is only the Profit above your running costs that the Tax man wants.



First sell some models, make a profit, if you do, don't spend it on your self or family, except on buying more models and stuff to make your models. Live only on your other taxed (or tax included/exempt) earnings this way if you find you are able to buy a luxury pad in Mayfair and buy a Rolls Royce or Gin palace on the sea in Monte Carlo, the money to pay the Tax man will still be in the bank.



No business went bust making a profit, many go bust spending the profits before they have paid their taxes.

Answer 3

Just as as addition to Modern Man's comments above. If your sales (not profit) exceed the VAT threshold (currently £79k), you will be required to charge VAT if the items you are selling are VATable (which is likely the case for toys). VAT returns would need to be submitted quarterly and expected to keep proper records.

Answer 4

If trading you must inform HMRC - if you trade but have no employment you must register for Self Assessment.

e-bay WILL inform HMRC that you are trading (automated computer system) - you can still claim tax credits but you need to inform the tax credits office of what you are doing as well as registering for Self Assessmenrt.

Answer 5

so much