The Taxman Cometh!

[Martin King 2Participant @martinking2]

Re record keeping; every single item we buy goes into a large stock book spreadsheet listing where it came from; paid by cash or debit card; actual postage; sale date; item number, charged postage etc. Quickbooks categories take care of it all for the accountant to do the Self Assessment return.

[Adrian R2Participant @adrianr2]

One point I hadn’t considered in my previous post is the cumulative effect of inflation on durable items owned for a long time. A used machine tool might be worth the same in utility value now as when it was purchased but if that was 30 years ago it could be worth more in cash simply because money has devalued, therefore if you sell it you will show a potentially taxable cash profit.

Lack of indexing is a feature of our taxation system generally, the only mitigation I can think of is that HMRC works in tax years rather than individual items so if you are going to make a “profit” on a larger item then try and sell a bunch of other things for less than you paid for them in the same period so that the overall gain comes out under than the threshold.

I guess proper traders such as Martin try not to hold items for long periods to avoid this problem, I don’t know if there are any other accounting provisions that would help individuals doing workshop clearouts etc.

 

[Bob WorsleyParticipant @bobworsley31976]

It is possibly more use to not say you are a trader, but that you are selling old personal items so come under the Capital Gains Tax regulations.

It is some years now since I looked but there is a minimum CGT items value of £5000, below that no tax payable. I was selling books, and it was only if a set of books was over £5k that tax came, if selling 50 books at £50 each then thet were all individual items. I found that throwing away books didn’t offset any other CGT, each individual item was treated individually. In my case I was selling off at auction many books, from my records over the previous 30 years I had spant £34k, and sold about £3k, lots disposed of, but none of the encyclopaedias were anywhere near £5k so nothing paid but also nothing to offset either.

Perhaps you sell the lathe etc as a machine and chucks separately, whilst a complete set, a chuck can be fitted to any machine, it is not specific to that machine, unlike one volume of a set.

Most people on this forum who get to three score and ten will have piles of accumulated things, and that they are treated as individual items is really the only way to cope. A set of castings is a set, but even they will be less than £5k. If you get to pay CGT on every individual item also means that the loss of value on each individual item also also allowed in offset. Just need the receipts!

 

[Stuart Smith 5Participant @stuartsmith5]

Chris

I don’t know if you have seen this, but if applicable there is a mechanism to stop needing to fill in a self assessment form. This is a link to the gov.uk page:

https://www.gov.uk/self-assessment-tax-returns/no-longer-need-to-send-a-tax-return

Stuart

[Chris CrewParticipant @chriscrew66644]

Stuart,

Thankyou for the information but unfortunately I would not qualify for the exemption. I always used to complete my Self-Assessment personally but for the last few years I have been paying an accountant to do it for me (fee tax-deductible, of course). Obviously, I still have to collate all my statements and invoices but it’s easier just to post all the paperwork to him and wait to see if his calculations match the tax bill I receive. Some years it matches and others not, but when it doesn’t it’s always in HMRC’s favour, strangely enough! I don’t argue, I just send a cheque to keep HMRC off my back.

[Adrian R2Participant @adrianr2]

Digging this up again as HMRC have issued some seasonal guidance for online sellers. I don’t profess to understand this fully but came across this statement which may be of interest to model engineers, clockmakers etc:

“Personal possessions that are mechanical items are not subject to tax when you sell them.”

Followed by an explanation that up to 50 years old (the item, not the seller) these are considered “wasting assets” so if personal possessions then no income tax or CGT due. Don’t know what happens when your Myford has its 50th birthday – my pillar drill is probably 80 by now and my lathe over 100.

Links here:

https://taxhelpforhustles.campaign.gov.uk/buying-or-making-things-to-selland-online-selling-tax-rules

https://www.gov.uk/capital-gains-tax-personal-possessions/limited-lifespan

[Gavin CarmichaelParticipant @gavincarmichael52429]

I am happy to be corrected on this but as far as I know mechanical items are not liable to Capital Gains Tax. Hence you can sell a classic car or watch without tax liablity.

[duncan webster 1Participant @duncanwebster1]

The government website says you don’t pay capital gains on things with a lifespan of less than 50 years, including antique clocks. Seems a bit conflicted to me, antique and less than 50 years.

[V8EngParticipant @v8eng]

I thought the definition of antique was something over 100 years old.

[jimmy bParticipant @jimmyb]

I had my notification today, asking for my NI number.

I may have got this wrong……

 

Jimb

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