£1000 tax free with ifs and buts.

[AnnieAnna]

Have you heard, from 2017, that if you sell....a bit.....you don't have to pay tax on the first £1000 of sales?

So the first bit of small print is - £1000 of sales a year - not profit. You can't add in any expenses.

The other bit of this recent budget declaration is to do with renting out a room or your driveway. I can see how that can be separated out of your general income because it's pretty specific but I can't see how it works with people who get their income from making and selling. It's supposed to help market traders and people (the JAMs) selling on Ebay.
So it says if you earn more than £1000 from selling stuff you make (or even don't make yourself??????) you have to do the normal tax return.
But you can discount the first £1000 of sales (not profit) but the rest of the tax return taxes your profit (ie it takes account of the expenses).....or you don't have to. You can just do a normal tax return.

I've got words like Doh! What? Is my pension my main income and my making 'on the side'? (Actually I'm not saying that because they are equal ) but generally my brain is very confused about how we work out the rules.
Does anyone understand and can explain in simple sentences?
Does anyone know a friendly tax man who can explain?
I mean what's to stop me taking £1000's worth of sales that didn't cost me anything to make or sell ...out of my general business accounts and saying they are tax free...........except the time and effort trying to work out what they could be .
Yours
Dazed and confused.......

[Caroleecrafts]

Okay how I read it was you can earn £1000 by making and selling over and above pensions without having to do a tax return. Over £1000 you have to do a tax return and include your pensions. A bit like the interest anyone can now earn £1000 interest per year without having to advise the HMRC. This to me is similar but for selling.

If you earn over the £1000 profit then you would declare on your tax return but only have to pay tax on any amount over £1000.

It gets complicated because giving the honesty factor over to the seller (which we all know can lead to dishonesty). I think it will save the HMRC time and money but that does not stop the likes of Ebay, Etsy etc notifying the tax office of who is selling as a business. In other words just be honest and not try to avoid what we should do. It will help people on pensions that perhaps make a few things to supplement their income without having to panic.

[AnnieAnna]

I was trying, yesterday, to use an example to see how it would work.
Pretend I'm earning enough from craft work to be paying tax.
I make a wonderful thing and sell it on Ebay for £1000.

Doing the micro entrepreneurs' new non tax thing:
Ebay keeps £10% = £100, PayPal takes 3.4% = £34 and don't forget the 20p , and there'll be postage. Let's say this wonderful thing is a little bit big and heavy = £20. What did the materials cost? Shall we say 1/4? = £250.
So my costs were £404.20.
I have £595.80 in my pocket.

Doing the sole trader thing:
Money in = £1000, Allowable expenses =£404.20 and of heat and light etc. Can we say £405?
Profit = £595 which is taxed at 20% = -£118
Which leaves me with £499 in my pocket.

Not as good......so doing the micro entrepreneur thing is marginally a good thing.

[AnnieAnna]

There seems to be more comments on line about it than there were yesterday.
It's still confusing though because some sites are saying it's distinguishing between one off sellers and traders. If ou are a trader you must register with the tax man. But government officials are saying we did this to help small market traders.
Why they didn't just say you can earn £1000 before registering as a sole trader, I don't know. It would have been simpler.

[AnnieAnna]

I'm still trying to figure it out.
So on my tax form I put my pension, and the profit I make for making costumes, but conveniently lose £1000 off that somewhere? Off my sales presumably. But I don't know what expenses went along with these particular sales so they are staying lumped in with my tax allowable expenses. But that's not following the rules.
My brain is fried.
Annie
off to think what could I make that doesn't cost me anything that would sell for £1000

[craftdancer]

off to think what could I make that doesn't cost me anything that would sell for £1000

When you find the magic solution will you share it with us? I think we would all like to be able to make something for no cost in materials (although time will be needed) and sell it for four figure sums!

Linda

[AnnieAnna]

I nearly did it .
After making costumes there's always odd bits of material left over. So technically the customer had paid for the fabric and the leftovers were free. And I was given a box full of thread covered in dust. Not counting time and the leccy used to vacuum the thread and do the machine sewing I made up little bags for free. I then sold them to a shop with 1000 children passing through every day for 3 weeks. They bought 500 a year off me for 50p each..........so I was a quarter of a way there . Since the crash and Michael Gove taking Tudors off the curriculum it's all gone pear shaped and they suddenly stopped buying anything from me...... without warning........a lot of naughty words and hard work selling boxes of the stuff myself in a trickley way.

Still I sell them for £1. Now I just have to sell 1000 a year myself and I've done it!!!!!!