Gordon Brown presented his final budget as Chancellor before he’s expected to move into No.10 Downing Street as Prime Minister. We thought we’d take a look at how it might affect an average eBayer:
An important change to note is for people who complete self assessment Income Tax returns. You can still file your tax return online up until the 31st January, but if you send in a hard copy return it needs to be received by HMRC by the 31st October. This applies from 2008, for tax returns from 2006-2007 the January 31st 2008 date will still be the deadline for both paper and electronic tax returns. If you want HMRC to calculate your tax liability the date will move back a month to 31st October to match the deadline for paper returns.
One significant area of the budget aims to reduce the advantage of small limited companies compared to self employed sole traders. â€œThe budget will raise the small companies’ rate in three stages from 20p this year to 22p in 2009â€³. This continues to reduce the advantages of an eBay trader as a limited company. With more accounting and reporting responsibilities as a limited company, being a sole trader looks more and more attractive.
If your turnover is approaching the VAT threshold there is a small increase from Â£61k to Â£64k before registration is compulsory. In reality if you’re that close the threshold a difference of Â£250 per month turnover isn’t going to give much room for manoeuvre. To combat carousel fraud more electronic goods are added to the joint and several liability list. Basically this means if VAT is reclaimed elsewhere in the supply chain all companies that handled the goods are liable outstanding VAT.
Many eBayers need to run larger vehicles to collect and delivery stock, it’s just not practical to do so in a small car. They’ll find an increase in car tax in the next year from Â£210 to Â£400 over the next two years. This will however only apply to the largest cars and 4Ã—4’s purchased since April of last year. Fuel duty also rises 2p a litre from October with further rises in 2008 of 2p, and again in 2009 a further 1.8p.
From 2009 higher rate tax will be payable on income over Â£43,000 pa. The 10% income tax band will be abolished and the basic tax rate cut from 22p to 20p but this won’t come into effect until April 2008. Sounds great, until you realise you’ll have to wait a year to benefit. It will also benefit high earners more than low earners! Low earners will effectively pay 20% of the first Â£2,230 earned (after personal allowances) instead of 10%. Perversely this won’t actually affect many people as if they have children working tax credit or child tax credits will kick in. The losers will be those without children who are part time workers, school leavers on low wages, and low earners. Of course this will often include eBayers just starting their businesses until they build up their income.
Finally anyone travelling from the UK to eBay Live will be pleased to know the chancellor rejected calls to add VAT at 17.5% to plane tickets on the basis that businesses would simply reclaim VAT anyway!