Hey, I have a small business on TikTok shop that has been doing quite well. I also sell on ebay. I’m currently setting up my Shopify store as I’m hoping to expand. However, I’m wondering whether I should be paying tax, charging VAT etc for items in my shop.
It’s not a registered business and I have no employees. I have been keeping account of all my spendings & earnings but I feel like I’m supposed to pay some kinda tax. If anybody is in the UK & has any knowledge of how the taxes work for small businesses, I would really appreciate ANY advice. I’ve been on the govt websites & it just doesn’t make sense to me.
Thank youuu
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Pretty sure once you have £85k revenue you need to register. Or at least contact an accountant before that to look into it deeper. If you’re nowhere near that then you’re good on VAT. But you’ll pay taxes over £1000 revenue as a sole trader and have to register
You need to pay tax if you earn over a certain amount.
This should help: https://www.litrg.org.uk/tax-guides/self-employment/do-i-have-pay-vat-if-i-am-self-employed
thank you, so does this mean that I pay VAT if I’m making over £85,000 a year because I saw elsewhere that only the first £1000 a year is tax free then you have to start paying VAT. Is that right/?
You won’t be registered for VAT - you don’t have to until revenue is over 85k. So you don’t need to charge VAT on your sales.
You get £1k trading income tax free, anything over you need to declare via self-assessment. You can waiver the tax-free 1k if you want to deduct business expenses from your sales. Only worth doing if your costs are over £1k. The income will be taxed on top of any employment income. So if you have a full time job that has utilised your personal allowance, you’ll be taxed.
This sums it up nicely for OP!
This is the best explanation I’ve come across. Thank you.