Came acrosss this article today.

By Ruth Lythe Money Mail Chief Reporter
PUBLISHED: 21:05 EST, 8 January 2017 | UPDATED: 15:45 EST, 9 January 2017


"Hundreds of thousands of families who earn extra cash online face shock tax bills and fines unless they declare the income by the end of the month.
Experts fear homeowners who rent out rooms on sites such as AirBnB, or ‘mumpreneurs’ who make extra cash by selling homemade goods, have no idea they must pay tax on their earnings.
In fact, most people taking part in the so-called ‘sharing economy’ are liable for tax on any cash they generate, in the same way they pay income tax on their wages.
Now, HMRC has said it is actively pursuing those who fail to declare these earnings by the January 31 deadline – and hopes its crackdown will raise millions of pounds in extra revenue.

It is using a powerful new computer system to compile information about taxpayers from ‘marketplace’ websites, such as Etsy and eBay, so it can better identify non-payers. And it is soon likely to be handed even greater powers to snoop on people’s online earnings by obtaining records from third-party payment processing firms.
Any internet sellers who are found to have owed tax and failed to submit a self-assessment return by the end of this month face a £100 fine.
It is understood the taxman will only come after people it thinks are operating like a business. Someone selling old furniture or children’s toys on eBay, for example, will not be asked to pay tax on the cash you get. But anyone who sells items regularly – or sells a number in a short space of time – and start to make a profit, may be classed as a small business by HMRC.


Read more: http://www.dailymail.co.uk/news/article-4100624/Thousands-AirBnB-eBay-users-hit-tax-raid-Families-make-extra-income-online-targeted-HMRC-crackdown.html#ixzz4WMXz4BHe
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http://www.dailymail.co.uk/news/article-4100624/Thousands-AirBnB-eBay-users-hit-tax-raid-Families-make-extra-income-online-targeted-HMRC-crackdown.html

I have been told here in the US, when you reach a certain amount of sales they will send you a 1099 form.

I do not know the exact amount, but it is pretty high. I was told $10,000 or so.

A friend does significant sales on Ebay but did not remember the exact amount.

Mike

Hi Mike,

See this http://smallbusiness.chron.com/irs-tax-filing-rules-ebay-sales-55145.html

From what I understand here in the US you have to pay taxes on all your sales regardless of the amount you sell. The article you posted is just a teaser of what is to come for anyone making sales online. That's just the way the cookie crumbles now days.

Thanks for the link Sas.

 Mike

Ok great,thank you UK tax man for spoiling the fun as usual.If true,I'm not surprised,but as its from the daily mail it's questionable, they are an awful paper,I don't trust anything they say.All this is going to do is prompt people to register as a limited company,it costs £12 to do so and then you can take £5k tax free dividend and then pay corporation tax @13% on the rest rather than income tax,which is usually 20-40% dependent on your earnings.This should only catch out people who are actually maxing decent money on a side business as the first £11k of income here is fax free anyway.How the tax man is going to decide if what you are doing is a business is ill defined so that means our tax office will probably just send out letters to people to scare she sh*t out of them to try and prompt people to pay(low hanging fruit) and then only actively pursue the bigger ones worth fighting in the courts.The courts have the power to make an order to instruct your employer to remove payments along with your normal tax from your pay cheque before you receive your wages.

I don't know how things will work in the States in years to come but UK law doesn't set a precedent in the US system,it could give US lawmakers some ideas though if it works

I agree, but people should not be shocked by the fact that they have to pay taxes.

I think the main problem is that most of these people "have no idea they must pay tax on their earnings", as the article states. Common sense dictates that one has to pay taxes on _any_ earnings and that's a fact of life, why would Ebay sales be an exception?

They should know about it and any seller should be aware of the laws that apply to their ebay activity.

For example in my country there is a fixed amount that is considered "household level" earning from online sales and that is tax exempt. If you go above that, you are considered an online business and are required to register and pay taxes accordingly.

Especially when someone makes a living from buying at garage sales and then selling stuff on ebay/craigslist/wherever, it should not come as a surprise.

@garlic mike, yes $10,000 is the eBay threshold when they submit forms. I think they are federally required to report on 10k+ accounts. One year I bought and sold enough to reach the level.

It's easy to keep taxes down, you can deduct business expenses, mileage to the post office, you will need to buy a computer, a printer, a camera, all deductible from profits. At some point for best deductions you might want to form an LLC. Depreciation of equipment then can be deducted too.
I myself quit for the year at 9 grand.

A friend who works at the income tax dept told me a couple of years back that income tax dept has taken lots of actions on people selling/buying on the internet. He says it's so easy for income tax authorities to ask paypal or credit card companies for info. He also cited most people caught are unable to furnish records on their costs of doing business on the internet.

Ebay doesn't report any earnings. It's paypal and you need to earn 20k and reach 200 sales. Sorry this is in the US

From April 2017, UK tax rules allow you to "earn" £1000 as a micro-entrepeneur tax-free, on things like ebay/air bnb / carboots, etc.

http://www.ukbudget.com/2016-measures/new-trading-and-property-income-allowances-aimed-at--micro-entrepreneurs-.aspx