Can i off set postage costs against my tax?

[louisa8760]

I have an ebay shop and a website. I charge customers postage costs on top of what they buy. I have been told to keep my postage receipts. Can i still off set them even when I have already charged customers postage?

Really aapreciate any help!

Many thanks

[ummmm]

You receive the whole amount inc postage. You need to keep them to show what the cost of the item was and the cost of postage. So you don't get taxed on the postage element.

[kinell]

postage is similar to other expenses you have incurred in making the sale...these for tax purposes are known as 'cost of sale'

any items you purchase like packaging materials fuel and vehicle expenses to go to the post office etc and of course your ebay selling charges and paypal charges are all allowable against the profit


it is quite ok to say charge £10 for postage and packing that costs you say £5, treat the total value of your sale including carriage as the sale price because if there is a differential at the end of the year between what you have charged and what costs have been incurred there will be tax implications one way or the other

[louisa8760]

Thank you. Is what you mean by treating it as one sale then in theory ignoring any actual costs/receipts from the post office? Just logging the total sale (incuding P&P from the customer?
Thanks again. The revenue say it "Tax shouldn't be taxing" its quite daunting in your first year!

[kinell]

what i meant was.....

lets say you are selling the item for £20 and you are charging an extra £5 for post/packing then in your tax return that is a sale of £25

and for example: the item cost you £10 and the postage and the box you put it in cost you total £4 then a total of £14 is allowable against the sale price of £25 meaning your taxable profit is £11

hope that is clearer

[kinell]

oh and dont ignore the postage receipts etc, you will need them to add up all your figures at the end of year

some items will be spread over the period

for example : you might purchase a roll of packaging tape but use it over several orders

[Skyline D]

The cost of postage is a business expense and yes it's allowable against tax.

However, the receipt of postage from your customer is business income and taxable. That's the point. You can't ignore the amount you charge your customers for delivery, especially if there's a profit element in it (which there almost certainly is).

[louisa8760]

Thank you yes that makes it clear!