A recent study carried out by Direct Line for Business has revealed that an incredible eight million people are either making their own products to sell or reselling goods for a profit via an online business at home. The study has highlighted the amount of Britons using sites such as eBay to help make a living or even supplement earnings they generate from their day job.
The research suggests that the top 5% of private sellers on eBay are generating an annual turnover of £18,094. The latest personal tax income threshold is £9,440 and according to the Direct Line for Business a ‘significant’ amount of people selling online are unaware that they actually qualify as a business and may need to pay tax on their turnover gained from selling products.
Jazz Gakhal, head of Direct Line for Business, said: “A large proportion of people clearly don’t view themselves as running a business, despite generating a sizeable turnover selling goods online to be dispatched from their home. People should check with HMRC if their activities online mean they qualify as running a business.”
HM Revenue & Customs ran a campaign last year targeting people who sell goods on sites such as Amazon and eBay without declaring their earnings. This campaign looked to target those who were selling goods as a business, rather than those occasionally selling personal items.
The voluntary disclosure programme closed towards the end of 2012, with the campaign raising over £650,000 for the tax office.
Figures have revealed that the number of Britons working for themselves has increased dramatically recently, with many of them being older, home-based traders. Mr Gakhal recommends anyone looking to make or sell items from home regularly should organise home business insurance from the start and look into when/if they need to pay tax.
If you are looking to start a business, tax is an area that needs to be considered. Speaking to a professional accountant can help you get to the bottom of your finances to ensure everything you do is above board. To find out more, please see our pages on Tax and Starting a Business.
View and comment on the original Telegraph article.