Capital introduced

[Old Greg]

I don't think it matters that I bought the stock before I started trading as I was a genuine collector, so in that respect I'm just like any other private individual who decides to sell some of their possessions.

So I have twin identities: one as a sole trader and one as an individual - it just so happens that I'm buying (in my sole trader capacity) from myself (in my private capacity) and I don't think it matters if I make a profit as I've had the items for many, many years and they weren't purchased originally with any profit motive?

Is that right? I always thought that there is no separate identity between a sole trader and the individual. But happy to be corrected as I'v only worked via a Ltd. Interested as Mrs OG is s a sole trader.

[Paralytic]

Is that right? I always thought that there is no separate identity between a sole trader and the individual. But happy to be corrected as I'v only worked via a Ltd. Interested as Mrs OG is s a sole trader.

Im my experience, there's no difference from a tax perspective ie. all profits are treated as income for the individual and are recorded via the individual's self assessment. Although, the sole-trader income could be recorded separately on that self-assessment.

Set up as a sole trader - GOV.UK

[eek]

Im my experience, there's no difference from a tax perspective ie. all profits are treated as profits for the individual and are recorded via the individual's self assessment.

Set up as a sole trader - GOV.UK

That's what I thought as well - the cheaply purchased collection becomes stock at the original purchase price.

The only workaround would be to sell via a limited company...

[interestedparty]

That's what I thought as well - the cheaply purchased collection becomes stock at the original purchase price.

The only workaround would be to sell via a limited company...

I agree with the principle of limited company = separate legal identity, etc, and fully understand how these work and the reporting requirements around them - I was using non-legal terminology.

But, if I ignore the fact that I have a business for a minute; I, like most people, will choose from time to time to sell some of my private possessions. We can't be expected to treat these sales in the same way as we treat business sales? On a practical level we can't be expected to keep records for every book, record, ornament we ever buy, so it's only to be expected that if we sell them at future date that the sale price will be greater or lesser than what we paid for it? As far as I'm concerned they weren't purchased with the intention of resale, or in any way connected to a business, so any profit or loss is irrelevant as far as tax is concerned?

I appreciate that when it's a capital asset (house, shares, etc) we should declare the transaction and pay any taxes that are due.

[Paralytic]

I agree with the principle of limited company = separate legal identity, etc, and fully understand how these work and the reporting requirements around them - I was using non-legal terminology.

But, if I ignore the fact that I have a business for a minute; I, like most people, will choose from time to time to sell some of my private possessions. We can't be expected to treat these sales in the same way as we treat business sales? On a practical level we can't be expected to keep records for every book, record, ornament we ever buy, so it's only to be expected that if we sell them at future date that the sale price will be greater or lesser than what we paid for it? As far as I'm concerned they weren't purchased with the intention of resale, or in any way connected to a business, so any profit or loss is irrelevant as far as tax is concerned?

I appreciate that when it's a capital asset (house, shares, etc) we should declare the transaction and pay any taxes that are due.

Even though these items were bought as personal possessions, as soon as you start selling them for a profit, I suspect HMRC would say they are being sold via your self-employed business and would have to declare that income in your SA on the basis of:


You need to set up as a sole trader if any of the following apply:

* you earned more than £1,000 from self-employment between 6 April 2019 and 5 April 2020

(from Set up as a sole trader - GOV.UK)

Also see "selling goods or services" on this page: Working for yourself - GOV.UK

So, if you have a few albums you want to sell privately, then I doubt anyone will know or care. But, if you have a collection of hundred of albums, and, outside of your self-employed business, sell these and make more than £1K in a tax year, and if HMRC came looking, I suspect they'd want to conflate the two.

Would these "private" sales be to the same market as your self-employed trading?

[Old Greg]

I agree with the principle of limited company = separate legal identity, etc, and fully understand how these work and the reporting requirements around them - I was using non-legal terminology.

But, if I ignore the fact that I have a business for a minute; I, like most people, will choose from time to time to sell some of my private possessions. We can't be expected to treat these sales in the same way as we treat business sales? On a practical level we can't be expected to keep records for every book, record, ornament we ever buy, so it's only to be expected that if we sell them at future date that the sale price will be greater or lesser than what we paid for it? As far as I'm concerned they weren't purchased with the intention of resale, or in any way connected to a business, so any profit or loss is irrelevant as far as tax is concerned?

I appreciate that when it's a capital asset (house, shares, etc) we should declare the transaction and pay any taxes that are due.

It's an interesting question. I think you may be better finding a forum more focussed on sole traders. We're mostly IT contractors working via Ltds.