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Are There Any Tax Deductions for Resellers in the UK?

An overwhelming number of online resellers have difficulty understanding the taxation process for their e-commerce business. Many still wonder - are there any tax deductions for resellers in the UK? The answer is - yes, there are! So, if you want to open prosperous stores, knowing all about them is a must. We'll explain what exactly can be deducted from your tax bill and how to compete on the best online-selling platforms.

Woman putting a sticker on a box
Lowering the bill for taxes can only be achieved by understanding what is tax deductible

Yes, There Are Tax Deductions for Resellers in the UK

Tax deductions are available for online resellers in the UK every year in the same way as for any company or self-employed individual. Every reseller is free to deduct the cost of the goods and services they had to procure so as to secure an income and keep the business running. 

As a small business owner, you might think that the cost of shipping, inventory, or software can be claimed as a deduction against taxable income. However, there are more activities and charges that are allowed to appear on the tax write-off list for individuals as well.

Female business partners having a conversation
Online businesses are regulated by the government as brick-and-mortar businesses

Write Off Expenses for Promotions and Advertising of Your Online Store

Spending on promotion and advertising doesn't have to give you a headache when you look at the bill at the end of the month. Among things to write off on business taxes are marketing and advertising. For example, if you use Facebook Ads, Google AdWords, website placements, or marketing via an influencer, you'll be allowed to deduct the costs. Additionally, this applies to subscriptions, plugins, and hosting as well.

For instance, if you are a vintage clothing reseller on Etsy or a handmade shoe and sneaker reseller on Depop, promoting your products with the help of influencers would boost your listings. What is more, if you are using more than one online marketplace platform, a crossposting tool would promote your listings to millions of shoppers.

Two women taking a photo
With the software for selling online, you will reach more buyers than ever before

Some of the Bills Can Be Written Off if You Use Your Home as an Office

In case a reseller manufactures products from a home office, some of the costs associated with heating and rent for the home can be written off. Make sure that you claim the expenses related to the process of furnishing your home office and a portion of the costs for running the business from the home office. That means that bills for electricity, Internet, phone and heating can be deducted. 

However, it's important to differentiate between what is used for purposes of running an e-commerce business and what is personal use. Consult with an accountant or tax professional about how much you are allowed to deduct per year.

If you are new to the online selling industry, check out this video about how much it might cost you to sell on Etsy, Depop, eBay, and Vinted.

Under What Conditions Can Expenses for Internet and Mobile Phone Be Deducted From Your Business Taxes?

Keeping an online shop afloat and customers satisfied is challenging at times. One must be prepared to engage with customers, supplies, and partners at any time. This will drive up the phone and Internet bill very quickly. When you use your phone for work, then the portion of the bill is allowed to be deducted.

On the other hand, everyone knows that all e-commerce businesses are dependent on the Internet, and for this reason, the costs are tax-deductible. In case the Internet is shared with your household, the cost is nevertheless tax-deductible.

Woman using a smartphone and a laptop
Your home office cannot function without the Internet or phone 

A Portion of Shipping Expenses Can Be Subtracted From Taxes

What else can you consider tax deductions for an online business? The majority of expenses for shipping your products to customers on Depop, Vinted, Shopify, and eBay are deductible from your taxes. Resellers can deduct supplies such as: 

  • Stamps,
  • Bubble wrap,
  • Postage,
  • Envelopes,
  • Labels,
  • And additional charges that are imposed upon delivery. 

Shipping is necessary to get the purchased item to the buyer; therefore, it is considered an integral part of e-commerce businesses. Also, reselling can become complicated when a customer wants a refund, so having shipping costs claimed is very helpful.

Woman holding a plate and packing paper
When shipping expenses are covered, there will be more opportunity for profit

The Cost of Supplies, Goods, and Services Needed for Running a Business Can Be Written Off

Do you make the clothes you sell by yourself? Do you need various materials to make necklaces, rings, and bracelets for your Etsy shop? Then, these supplies are considered important for the store, thus allowing you to deduct the costs of purchasing them from your taxes. For instance, if you make hand-embroidered clothing, you can claim the cost for the materials, labels, and threads in expenses.

Woman holding a dress
Do you need certain goods to produce your product?

Now Let's Talk About Fees - Are Multi-Vendor Marketplace Platform Fees Tax-Deductible?

Let's face it, reselling goods online doesn't come cheap. On eBay, there are two types of charges - listing fee and final value fee, and on Depop, there is a 10% selling fee. Almost all online selling platforms charge resellers for creating listings and then selling them successfully

The issue with selling charges is that resellers would hardly make a profit from their listings in case taxation is imposed. Luckily, fees associated with the platforms can be deducted from taxes. The safest method for determining how much can be deducted is by consulting with an accountant.

Even Using Credit Cards on Depop, eBay, and Shopify Doesn’t Come Free - So, Are Merchant Fees Tax Deductible? 

To accept payments, you'll need to accept debit or credit cards. There are many fees connected with processing debit and credit cards. However, these are essential for any online reseller, and in the UK, merchant charges are typically deducted from taxes. 

As a business expense, merchant charges may be claimed as a deduction against taxable income which will reduce the amount you will have to pay. Bear in mind that just the actual fees paid are allowed to be claimed and not any additional charges.

A person using a laptop and a credit card
Charges during processing credit and debit cards can be subtracted from the bill

What Will Make Reselling on the Internet Worthwhile? It's Simple - Online Selling Tools

Filing tax returns on time and managing to calculate exactly how much you owe and how much you can claim as a deduction is an intimidating job. However, with the help of a crossposting app like Zipsale, you'll have an easier time managing everything. 

First and foremost, cross-listing software is designed to keep all your purchases and listings in one place. There will be an overview of how much you sold every year and what is still pending. Apart from this, Zipsale, a cross-posting software, will improve your profit by cross-listing the products

Not only will you earn more, but you'll gain regular buyers is even more valuable - all thanks to multichannel listing software. Don't waste your time any longer, and register with software to sell on both eBay and Depop simultaneously. 

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