Conditions for e-trader status

Are you making money from selling online?

Many people now sell goods online on sites like e-Bay. Does this mean you are liable for tax? It depends on whether you are trading online. Trading means that you provide goods or services to customers via an online site and they pay you in return.

You are trading if:

you sell goods that you bought for resale
you make items yourself and sell them, intending to make a profit
you sell or buy goods for other people and receive money for this (for example on commission), or
you provide a service and receive payment (in cash or in kind).
If you don’t think you are trading, or only sell occasional items, check whether you qualify as a non-trader.

Still not sure? You may find these examples useful.

If you are trading online you will be regarded as self-employed for this trade and you must register with us and possibly complete a tax return. Find out now how to register as self-employed and read about the taxes e-traders are required to pay.

You must register to let us know within three months of starting your business, or you could pay a penalty.

Heard of affiliates?

Affiliates are the e-commerce version of the traditional agent/referral sales model. An e-commerce affiliate is a website that advertises products or services, but refers potential customers to an e-commerce site to purchase the product. For example, many affiliates refer customers to sites like Amazon.com. If the customer makes a purchase, the affiliate who referred them normally receives a small payment.

Affiliates may be liable to pay tax on the payments they receive for referrals. If you are uncertain of what your status is, contact HMRC for more guidance.

HM Revenue & Customs

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Posted: 02|19|07 at 8:07 am. Filed under: UK News.