HMRC Advice

[goldbones]

2 minutes ago, FriedrichVonHayek said:

I thought the capital gain would have to be over £10000 in a year before any CGT is payable irrespective of what type of coin has been sold.

 

Britannia's are free of capital gains

[FriedrichVonHayek]

1 minute ago, tepid said:

 

Have you kept records & receipts? Once Ebay fees are included, P&P, storage costs and the like, I'm sure even traders can file their taxes in such as way that not tax liability is incurred.

 

Also, can you give us a rough idea of the volume/frequency/turnover of your PM sales on Ebay? I'm sure other members would be interested in what would trigger a fishing trip by HMRC.

 

 

I don't have any receipts but my eBay sales are just under £11000 and 144 transactions since Sept 2012.

 

[sovereignsteve]

I think the difference in whether a gain is capital or income can be very subjective and not necessarily as straightforward as that. With bullion, it is straighforward as you point out, there is a clear indication of any intrinsic increase or decrease in value.

Many items that are normally subject to capital gains such as works of art, collectables etc will not have a normal value that can so easily be measured.

What about "collectable" coins? What is the differentiation between a bullion and a collectable coin? What about a bullion coin that can become collectable?

Collectables that are personally held and sold at some point will still be subject to capital gains only whether or not the intrinsic value of the metal for example has changed.

it is not this aspect that determines the taxable status. Income tax is only applicable is someone is acting as a trader. As rightly pointed out, there are grey areas here and HMRC will try to make subjective decisions as they see fit.

Surely we must have an accountant or two on this forum. If not, I'll have a word with my son who is.

 

[sovereignsteve]

2 minutes ago, FriedrichVonHayek said:

I don't have any receipts but my eBay sales are just under £11000 and 144 transactions since Sept 2012.

 

I would think that volume would probably do it. One aspect they might look at would be whether you continually have items for sale.

personally I only sell anything on ebay when they give me a fee discount which only happens every few months.

[goldbones]

 

Just now, FriedrichVonHayek said:

I don't have any receipts but my eBay sales are just under £11000 and 144 transactions since Sept 2012.

 

Well you won't have capital gains tax to pay because that's stretched over time, it's £11,000 capital gain before you pay tax

suppose you bought £10,000 of silver and its now worth £22,000 and that happens in a tax year, then £22,000 -£10,000 -£11,000 allowance would mean there is tax to pay on £1000

[SoulUK]

I'm in training, Let it be known I have recently failed by Personal and Business tax exams. But I have got the books! lol

It really is a grey area as each case is different, and HMRC use a team who would make their own judgement if your activity has a Business or Personal tax liability

[JB3]

24 minutes ago, goldbones said:

I think by profit they mean profit above movement in the price of silver, the price of silver or gold is subject to capital gains tax which is a separate tax from income tax.

So for example say you bought some silver coins for £12 each and sell them at £17, £5 is income taxable

Now suppose you buy silver at £12 each and the price goes up 10% and you sell them for £18.20 , well the £5 is income taxable and the £1.20 is capital gains taxable (assuming it is not a Britannia).

This is because what you buy=capital goods and the gain or loss is capital gain or loss, while the profit is outside the capital.

Understand?

As far as I understand, this is incorrect, and it's certainly the first time I've ever heard this definition.

 

'Capital gains' is the profit made, the difference between purchase and sale price minus costs of sales, of non-inventory assets. '(Operating) profits' is the same for inventories. If you are a sole trader, your operating profits form part of your income and are thus subject to income tax.

 

Thus, traders pay income tax on profits, companies pay corporation tax on profits, and individuals and companies pay capital gains tax on non-inventoried assets.

 

The question is, which are you and were your metals purchased for subsequent sale (inventoried) or is the sale incidental?

 

DOI: I am not a tax accountant.

[FriedrichVonHayek]

14 minutes ago, tepid said:

 

Have you kept records & receipts? Once Ebay fees are included, P&P, storage costs and the like, I'm sure even traders can file their taxes in such as way that not tax liability is incurred.

 

Also, can you give us a rough idea of the volume/frequency/turnover of your PM sales on Ebay? I'm sure other members would be interested in what would trigger a fishing trip by HMRC.

 

 

 

 

2 minutes ago, JB3 said:

As far as I understand, this is it correct, and it's certainly the first time I've ever heard this definition.

 

'Capital gains' is the profit made, the difference between purchase and sale price minus costs of sales, of non-inventory assets. '(Operating) profits' is the same for inventories. If you are a sole trader, your operating profits form part of your income and are thus subject to income tax.

 

Thus, traders pay income tax on profits, companies pay corporation tax on profits, and individuals and companies pay capital gains tax on non-inventoried assets.

 

The question is, which are you and were your metals purchased for subsequent sale (inventoried) or is the sale incidental?

 

DOI: I am not a tax accountant.

I would say that my sales were incidental.

[JB3]

In other words, you could sell your silver below spot on the day but, if it was more than you paid for it and it's non-inventoried, you are subject to CGT, obviously with the thresholds.

 

 

[FriedrichVonHayek]

8 minutes ago, sovereignsteve said:

I would think that volume would probably do it. One aspect they might look at would be whether you continually have items for sale.

personally I only sell anything on ebay when they give me a fee discount which only happens every few months.

I have had a quick estimate of how much tax I would have to pay if the HMRC says that I owe them money and I don't think it would be much more than a couple of hundred pounds once you take off eBay/paypal fees plus postage.

[goldbones]

Just now, JB3 said:

In other words, you could sell your silver below spot on the day but, if it was more than you paid for it and it's non-inventoried, you are subject to CGT, obviously with the thresholds.

 

 

Yeah you'd have to be shifting A LOT before you even pay £1000 to hmrc, if you sold £120,000 as your turnover in one year and you made £20k capital gains :

£100,000 was what you bought the silver at, silver goes up 20% you manage to make that 20% cumulative

£120,000- 100,000-11,000 means you owe tax on £9000 and at 18% rate band 18% of £9000 is £1620

So on a £120,000 turnover with a base cost of £100k youd owe HMRC £1620 

[SoulUK]

If they deem you owe something, they'll also add on fines for missing payment dates & failure of submissions

Best thing with HMRC is be honest and make sure you have records

[JB3]

 

5 minutes ago, goldbones said:

Yeah you'd have to be shifting A LOT before you even pay £1000 to hmrc, if you sold £120,000 as your turnover in one year and you made £20k capital gains :

£100,000 was what you bought the silver at, silver goes up 20% you manage to make that 20% cumulative

£120,000- 100,000-11,000 means you owe tax on £9000 and at 18% rate band 18% of £9000 is £1620

So on a £120,000 turnover with a base cost of £100k youd owe HMRC £1620 

Silver going up doesn't reduce your tax liability.

 

In your example, the tax would be 18% on  £20k. I.e. Sale price over cost of sales, minus any allowance.

 

 

[SoulUK]

2 minutes ago, JB3 said:

 

Silver going up doesn't reduce your tax liability.

 

In your example, the tax would be 18% on  £20k. I.e. Sale price over cost of sales, minus any allowance.

 

 

think the -11000 is the allowance

[FriedrichVonHayek]

2 minutes ago, SoulUK said:

If they deem you owe something, they'll also add on fines for missing payment dates & failure of submissions

Best thing with HMRC is be honest and make sure you have records

I did phone them last week and I told them I had sold my coin collection which is in my opinion my personal property.

She seemed quite happy with my explanation but told me to be mindful of the tax implications when selling online.

[goldbones]

4 minutes ago, SoulUK said:

think the -11000 is the allowance

Yes you'd pay tax only on the £9000, if it is Britannia coins you pay zero because those silver coins dont have CGT because they are legal tender

[FriedrichVonHayek]

If you were going to trade Gold/Silver on eBay and make money you would have buy it for at least 40% under the resale price to make a small profit, which I think is impossible.

[SoulUK]

3 minutes ago, FriedrichVonHayek said:

If you were going to trade Gold/Silver on eBay and make money you would have buy it for at least 40% under the resale price to make a small profit, which I think is impossible.

Don't agree with that

Looking at monster box prices (500) from STG and the prices of some Ebay sellers, I believe that you could easily make a profit (all be it a small one per coin)

 

[FriedrichVonHayek]

5 minutes ago, SoulUK said:

Don't agree with that

Looking at monster box prices (500) from STG and the prices of some Ebay sellers, I believe that you could easily make a profit (all be it a small one per coin)

 

If you bought a monster box of 500x1oz 2016 Kangaroos it would cost you £5956.95 or around £11.92 each, you would then have to sell them for £17 each to make a profit of 299.65 or approximately 59p per coin after postage and eBay/paypal fees.

I was wrong you probably have to buy at 50% under your resale price to make anything worthwhile then pray that the Silver price does not drop in the meantime.

[goldbones]

Just now, FriedrichVonHayek said:

If you were going to trade Gold/Silver on eBay and make money you would have buy it for at least 40% under the resale price to make a small profit on eBay which I think is impossible.

I think its hard to make a living off it, not just selling on ebay. You have to have a large inventory turnover

Look at bullion dealers balance sheets and compare the high turnover types to smaller companies:

baird&co: https://companycheck.co.uk/company/02269558/BAIRD--CO-LIMITED/summary

vs

hatton garden metals

https://companycheck.co.uk/company/06426684/HATTON-GARDEN-METALS-LIMITED/summary

[morezone]

47 minutes ago, FriedrichVonHayek said:

If you bought a monster box of 500x1oz 2016 Kangaroos it would cost you £5956.95 or around £11.92 each, you would then have to sell them for £17 each to make a profit of 299.65 or approximately 59p per coin after postage and eBay/paypal fees.

I was wrong you probably have to buy at 50% under your resale price to make anything worthwhile then pray that the Silver price does not drop in the meantime.

Plus, as a trader if your turnover is more than the VAT registration threshold (currently 82k), you would have to add VAT unless you have an agreement with HMRC to work on the marginal scheme.

In the USA, I believe Pay Pal have an agreement with the IRS where once a certain volume of funds passes through a Pay Pal account, a declaration/form has to be submitted.

With the growth of the internet and eBay, we're seeing more and more people who are employed under PAYEE scheme who trade online but don't submit a self assessment and declare their "part time" earnings.  For genuine traders it does have a huge impact as they're automatically at a disadvantage of 20% on profit margins.

[goldbones]

1 hour ago, FriedrichVonHayek said:

If you bought a monster box of 500x1oz 2016 Kangaroos it would cost you £5956.95 or around £11.92 each, you would then have to sell them for £17 each to make a profit of 299.65 or approximately 59p per coin after postage and eBay/paypal fees.

I was wrong you probably have to buy at 50% under your resale price to make anything worthwhile then pray that the Silver price does not drop in the meantime.

You could hedge against a drop to lock down the whole thing by placing put options on a silver ETF, that way if silver goes down your puts will profit.

[Cornishfarmer]

no sure about this subject but if you buy a car for £15000 and sell for£7.500 you cant claim the loss against tax and you dont get charged tax on the £7500.

why should it be any different to this.     

[goldbones]

10 minutes ago, morezone said:

Plus, as a trader if your turnover is more than the VAT registration threshold (currently 82k), you would have to add VAT unless you have an agreement with HMRC to work on the marginal scheme.

In the USA, I believe Pay Pal have an agreement with the IRS where once a certain volume of funds passes through a Pay Pal account, a declaration/form has to be submitted.

With the growth of the internet and eBay, we're seeing more and more people who are employed under PAYEE scheme who trade online but don't submit a self assessment and declare their "part time" earnings.  For genuine traders it does have a huge impact as they're automatically at a disadvantage of 20% on profit margins.

Well you could get away with buying VAT free silver and selling it for a profit and essentially pocket what is supposed to be paid to the government, i'm no expert but that sounds illegal...it just doesn't sound right, i'm not talking about you owing money i mean it might actually be in of itself a criminal offence a bit like selling goods wholesale duty free, if that is the case then the goods can be seized and you'd get fined on top. 

I don't know but that sounds a little too good to be true even if you're only buying small amounts and selling without VAT registration.

[morezone]

Just now, goldbones said:

Well you could get away with buying VAT free silver and selling it for a profit and essentially pocket what is supposed to be paid to the government, i'm no expert but that sounds illegal...it just doesn't sound right, i'm not talking about you owing money i mean it might actually be in of itself a criminal offence a bit like selling goods wholesale duty free, if that is the case then the goods can be seized and you'd get fined on top. 

I don't know but that sounds a little too good to be true even if you're only buying small amounts and selling without VAT registration.

It is illegal which is why HMRC have been trying to take steps for a number of years.  Some people do it on a small scale which means they just owe income tax and possibly NI contributions.  Some people do it on a much larger scale which means they owe both VAT and income tax.  Unfortunately HMRC are too under staffed to deal with it on a large scale.