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How to File Taxes as a Reseller in the UK?

Since the pandemic, an overwhelming number of people have decided to open their own stores on the best online-selling platforms. Internet shops in the UK have been booming in the last year. This has raised an important question. Should you know how to file taxes as a reseller in the UK? Take some time to read all about filing taxes for sold items on the Internet before starting an ecommerce business.

Calculator on top of a red notebook
Invest time in thorough preparation before opening a shop on an online marketplace platform

Let’s Clear Up the Myth - Are Online Resellers Obliged to Pay Taxes?

If you have opened an online store in order to make a profit, you'll need to pay taxes and fill in a self-assessment tax return annually in order to report all expenditures and income. This form needs to be sent to HM Revenue & Customs (HMRC).

However, if you have opened an online shop on eBay, Shopify, and Etsy to get rid of unwanted used clothes and items from your home, you won't be obliged to pay taxes for resellers. In case you start reselling belongings regularly, you'll need to declare income.

Do You Have to Register Your Business for Taxes? Take Action and Create an Account on HMRC

Many online resellers use cross-listing software to resell items on different marketplaces and thus ensure a profit. Their annual income is substantial; therefore, they need to register for VAT (Value Added Tax). As of April 2023, all e-commerce businesses that garner over £85,000 need to register for VAT. The process of registration is simple. Visit the HMRC website and create a new account by filling in a form.

A person pointing to the laptop screen
Successful shop owners who use software for selling online make a significant profit annually 

You Won’t Know How to Pay Taxes as a Reseller Properly if You Don’t Keep an Accurate Record

Nothing is more important than knowing exactly what you sold and how much. For example, clothing resellers and other types of resellers have to conscientiously keep track of all sales, profits, and expenses throughout the entire year. Preparation is everything, and this will make the process easy-peasy. 

But everyone knows how hectic and chaotic the orders and online sales can get. This is why you'll need a secret helper - a crossposting app. Now that you can track all your orders, listings, and sales from only one inventory with a crossposting tool, there won't be any dilemmas or hesitation once the report has to be filed.

Woman working on a computer
If you are struggling to keep up with sales and orders, invest in software for selling online

What Type of Tax Might E-commerce Businesses Have to Pay?

E-commerce businesses are differently set up. The service each provides is different; therefore, various taxes will apply to them. It's important to read instructions on the HMRC website to understand what category your store falls under. Here's what you might encounter:

  • VAT,
  • Income Tax,
  • National Insurance,
  • Business rates,
  • Corporation Tax,
  • Employers' PAYE.

Here’s What You Should Know About How to File Taxes as a Reseller

Before filing your reseller taxes, you will need to choose the correct type. You should consult with accountants about whether your business should file Self-Assessment tax returns, a VAT return, or both. It's essential to choose the right one.

Then, the next step is to assess your financial records. Ensure that it shows all expenses and sales for the entire year. Your financial records should include:

  • Receipts,
  • Invoices,
  • Bank statements,
  • Additional financial records.

Fill in the Correct Tax Return for Your Sales and Submit It to the HMRC

When you are ready to file, fill in the relevant details online on the HMRC website. The information that will be requested is details about expenses, income, and tax deductions. Everything should be available for analysis in your financial records. 

After filling in all the information, you can submit the reseller tax return to HMRC. Of course, do not submit anything before assessing whether all info is accurate. The deadline for filing is typically January 31st.

Close-up photo of papers and markers
Ensure that the correct data is provided in the forms on the HMRC website

Check Your Inventory - Make a Payment for Any Taxes You Owe

In case the reseller owes any taxes, the amount will have to be paid online to HMRC. Resellers are allowed to make payments using bank transfers and credit or debit cards. It's of utmost importance to pay on time in order to avoid any interest charges or penalties

The great aspect of the HMRC website is that it provides all the necessary information so you can learn all about taxes in the UK for resellers just by visiting their website.

Shoes on a rack with a sales sign next to it
As a new online reseller, you will have a lot of responsibilities

Make Reselling Easy With a Selling Software

The rules and regulations keep changing constantly, and the e-commerce industry can bring about a lot of stress for e-commerce business owners. Keeping records and not missing deadlines when it comes to taxes is incredibly essential. 

Apart from this, making sure you are a top seller by keeping track of orders can take a toll on any business. That means that investing in software to sell on both eBay and Depop, as well as on other popular platforms, is necessary. 

Not only will you be able to sell more, but you will also have an opportunity to have a clear overview of your success and growth. The main service of multichannel listing software is to help you control listings if you have a successful e-commerce business.  

Watch this video on how such cross-posting software works.

If You Are Researching Great Online Selling Tools, Zipsale Is the Right Answer

Do yourself a favor and register with Zipsale. This incredible selling tool will keep an eye on listings 24/7 while you organize financial records for filing tax returns. We guarantee that when you connect numerous marketplaces such as eBay, Etsy, Facebook Marketplace, and Shopify, your profit will increase in record time. Apart from profit, the great thing about Zipsale is that you can do everything from one place, your home - from uploading listings to checking what items have been sold. Don't hesitate to help yourself by registering today! 

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