Paypal

[jaydah]

Is income on Paypal taxable ? Erm....how could HMRC track ones account ?

[jaydah]

Hiya pinkilady - thanx for that, am not in the VAT bracket, yet :)

Now where's our lovely boyyo ?

[Buenchico]

Paypal isn't a source of income; it's simply a way of transferring funds.

If the money arriving in your Paypal account has come from a kindly uncle sending you a monetary gift for Christmas, it's not taxable. (It's just the same as if he sent you a postal order or cash through the post).

If the money in your Paypal account is derived from eBay sales where you've simply disposed of your personal property (e.g. that hideous sweater that your granny gave you for your birthday), again it's not taxable. (It's the same as advertising a 'Noel Edmonds type sweater' on your local supermarket's customer advertising board).

However if the money in your Paypal account is derived from selling items on eBay which you've purchased for re-sale (e.g. from charity shops, from local auction rooms or from 'bankrupt stock' dealers), then it's classed as running a business as a self-employed trader. The law requires you to register that business with HMRC within two months of starting it. (There's an automatic financial penalty if you don't). Then, if you've already used up you tax-free personal allowance with your regular employment, you have to pay income tax (at 20% unless your total income takes you into a higher tax bracket) on every penny of your PROFIT (not on your INCOME).

HMRC employs hundreds (or possibly thousands) of staff to scour 'Free Ads' pages and auction sites like eBay looking for people who're operating as traders but not declaring their income for taxation.

Chris

[jaydah]

Oooh, do they employ 'chasers' Chris; our local staff keep throwing ledgers at me as the claim not to be IT literate.

[jaydah]

I dont know how one would transfer funds to someone through Paypal - never tried that. I do sell my stuff as am preparing to downsize. It's a good way to transfer funds globally as it seems a virtual bank.

Boyyo's unleashed ! He's gone feral I s'pose :)

[Skyline D]

I'm moderately amused by the suggestion that if you "stick with a personal account you are not required to declare it for self employment".

That is of course utter nonsense. The test for self employment isn't what kind of account you happen to have on ebay, it's as Chris already described. If you are buying things to sell then you are ipso facto self employed, regardless of what your account status is.

[mrs_overall]

I've been having a massive clear out and have recently made a four figure sum on Ebay - all personal posessions.
Paypal contacted me & I had to answer a load of questions to prove I am not money laundering!

[boxtops]

Jaydah I would recommend PayPal for sending and receiving money - it means the people at the other end never know your bank account details, PayPal hold them securely. I use it for all my PayPal dealings, it's excellent.