Rhodri Marsden: Cyberclinic

What's the tax rule for on-line traders?


Q. I've begun trading quite a lot using eBay and PayPal, and have started to wonder about tax implications. Do any readers have similar concerns?

A. There's no doubting the addictive properties of eBay: thousands of people seduced by the thrill of the auction. The tie-up between eBay and PayPal, the on-line payment system, has led to large numbers of eBay transactions taking place in an internet bubble, completely separate from the "real" world of cheques and bank transfers. "It doesn't seem like proper money," writes Rich Lockwood. "I never withdraw PayPal cash to my bank account, so it's a separate fund which I just use for buying things online." A huge amount of money is shunted via PayPal - some $8.7bn (£4.6bn) so far and growing by 37 per cent a year - but most correspondents aren't worried about their personal tax implications. "I love using eBay and PayPal," writes Rosie Gilchrist, "but I don't make a profit, and it just feels like I'm in an enormous car-boot sale."

But how do you know whether you've made the step from cyber-boot-sale addict to taxable trader? If the profits are pouring in then it's probably obvious, but the full list of conditions are known as the "badges of trade", which are listed in full on the HM Revenue & Customs website, or can be seen at www.tinyurl.com/eo58k. Patrick O'Brien from HMRC warns that the internet is no different to the real world when it comes to tax: "If someone is regularly selling items on the internet they could be acting as a business and may have a responsibility to register with us." So it's up to you to monitor your own eBay activity, and speak to your tax office. PayPal's Cristina De Parres says: "If the authorities came to us and wanted to investigate a particular account, we would be obliged to hand over the information." After all, you wouldn't want to incur the wrath of reader Gerald Haigh, who urges you to go legit: "Because people like me, who declare every penny, will be miffed if you don't."

Diagnosis required

Next week's question comes from Nina McDonald:

"I've had some huge mobile phone bills recently after using my phone abroad. Will the prices ever come down, and does technology offer any way around the problem?" Any comments, and new questions for the Cyberclinic, should be emailed to cyberclinic@independent.co.uk.

Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvSeries 5 opening episode attracts lowest ratings since drama began
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Life and Style
fashionThe supermodel on her career, motherhood and Cara Delevingne
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
ebooksAn unforgettable anthology of contemporary reportage
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
premier league
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Maths Teacher

£85 - £125 per day: Randstad Education Chester: Job Opportunity for Secondary ...

C# asp.net Developer - West Sussex - permanent - £40k - £50k

£40000 - £50000 Per Annum + excellent benefits package: Clearwater People Solu...

SQL Report Analyst (SSRS, CA, SQL 2012)

£30000 - £38500 Per Annum + 25 days holiday, pension, subsidised restaurant: C...

Project Manager (infrastructure, upgrades, rollouts)

£38000 - £45000 Per Annum + excellent benefits package: Clearwater People Solu...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments