So you've gone all-out on Royal Wedding memorabilia and collectibles. In fact, you've bought more than you probably need – or maybe just need to get rid of some other stuff to make room for it. The good news is there's a definite market for it. Those official canvas gift bags given to non-VIP guests have been spotted on eBay with bids of up to £30,000 on them!
Selling your possessions and goods online
Every year, huge numbers of people score themselves a little extra cash by selling personal possessions online. Many more rent out rooms or driveways they aren't using. Whether your main goal's to help with the bills or simply clear out your living space, there are many ways to turn unused or unwanted things into easy money. Even hobbies like baking or handicraft can become profitable if enough people are interested in what you're doing – and that's sort of the problem. "Profitable" can be a dangerous word if the taxman hears it. Every year, more and more people are finding out the hard way that HMRC takes a dim view of them running businesses without paying tax.
Are you liable to tax?
What actually counts as a business, though? The answer, unfortunately, is almost anything if you're doing it enough or making enough from it. In general, you can safely make £1,000 a year from hobbies or online selling before the taxman gets interested. If your profits go over that, though, you'll need to declare them as income. Other questions it's worth asking yourself are:
- Are you buying or making things specifically to sell them?
- Are you making the same kinds of sales often or regularly?
- Is your main goal to make money?
If you're answering yes to some of all of these, HMRC might well decide you're running a business. The first thing that means is you'll need to register for Self Assessment tax returns. Even if you already pay tax through PAYE, you can still end up owing more if you've got other cash coming in. The Self Assessment system is a way of letting HMRC know about that income, and what you're spending to earn it.
Running a business isn't as simple as counting the cash you get from sales – and if that's all you're doing you're probably paying way too much tax on it. Under Self Assessment, the money you spend to make your business work actually brings down the amount of tax you owe.
Sponsored post. Copyright © 2018 Bradley Post, Managing Director at Rift Tax Refunds