Self-employed/tax question


#1
  1. Employee personal allowance - £11,850 per year
  2. Class 2 NI - £6,025
  3. If you earn over £1000 you have to declare it

How does point 3 work with points 1 & 2?


#2

You have to declare it but won’t pay any tax on it if below the threshold. (I think).


#3

Yep.


#4

thanks


#5

so am I going to jail?


#6

Nope.


#7

Yes.


#8

don’t think I made over £1000 last tax year anyway


#9

so basically I have to make sure I don’t earn enough or sell enough things to go over £1000 this year


#10

see it as an incentive to really take your foot off the pedal once you cruise above £850


#11

can’t imagine most people who sell a few of their games/old electronics on ebay declare this do they?


#12

Will stop promoting your album just in case :wink:


#13

They don’t have to


#14

so you’re saying if I sold my amp because I need money I don’t have to declare that?


#15

also this article contradicts itself:

. The basic rule of thumb is that any earnings above an individual’s tax-free personal allowance of £11,000 are taxable if the money is considered to be business profit

. Under the new rules, sellers running small businesses online will not be taxed on the first £1,000 profit they make


#16

I don’t think selling your odds and sods on eBay counts as ‘business profit’ unless you’re registered as a business seller and clearly running some kind of operation i.e. re-selling wholesale items, buying and selling used items for profit, etc


#17

so say I earn £800 from art commissions and bandcamp sales but then sell something on ebay for £300, do I then have to declare my earnings to HMRC because the sale on ebay put me over the £1000 threshold?


#18

With all the authority of someone who doesn’t know the legal jurisdiction at all but who uses eBay a lot without factoring it into my self-employed earnings, I’d say no. That £300 is not part of an employment or a business so you can forget about it.

Same way that if you owned one car but sold it second hand, that money does not at any point constitute ‘earnings’. You’re offloading an asset to recoup some of the money invested in it previously. If you were regularly selling second hand cars and bringing in income from it every month, it would become part of your earnings. Bandcamp sales and art commissions are done with the intention and hope of bringing in recurring income, so they are earnings.

Disclaimer that I 95% have no idea what i’m talking about, but I think this is all correct


#19

oh I was assuming that anything you sold counts as earnings


#20

If you’ve bought the item in the first place and you sell it at a loss (because of depreciation), then you’re not making a profit on it.