Full time employment + supplementary income below 2.5k

Full time employment + supplementary income...

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I work in full time employment and do the occasional bit of web design as a sole trader which per year amounts to less than £2,500. I am confused as to why someone can receive up to £2,500 as say a gift or earnings from selling items on eBay and not have to pay tax but I am filling out a tax return declaring my minimal extra income and being taxed for it.

I called HM Revenue & Customs about this matter after receiving a letter entitled "Should I be in Self Assessment" and I didn't get a straight answer. I was given the example of an eBay seller but it didn't help me understand where I stand with regards to declaring myself self employed as well as employed by another company.

Is this a contradiction that if you declare yourself as self employed but earn under £2,500 you are still liable for tax but if you don't declare yourself self employed and earn under £2,500 then you're off the hook so to speak?

I've been in this situation for the past 5 years and the recent HM Revenue & Customs letter through the post only served to confuse me. My simple question is, should I un-register as being self employed but still keep tabs on my earnings to make sure I'm not exceeding £2,500?

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By ShirleyM
02nd Jun 2012 12:16

Receiving gifts and selling on Ebay

Receiving a gift does not make you self employed, and neither does selling on Ebay, if you are just selling personal items that you no longer need.

If you buy or make goods to resell on Ebay then you are trading, and therefore self-employed. If you earn extra money from a trade or hobby then you are trading and come under self employment. You are not 'off the hook' if you earn a little casual money (under £2,500), and although you may, or may not, be self employed you still have to declare it and pay the tax due if your total earnings are above your personal allowance.

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Replying to Disabled Accountant:
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By mikefosbrook
02nd Jun 2012 16:37

Thank you for answering my question ShirleyM that's a clear response. 

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