CT600 for eBay Sellers
If you run your eBay business through a limited company, you'll need to file a CT600 corporation tax return. This guide covers the specific considerations for eBay sellers.
eBay Revenue Recognition
Your Box 145 turnover should reflect the gross selling price before eBay fees:
Gross sale price: £50.00 eBay fees: £6.35 PayPal/payment fees: £1.45 Net received: £42.20
Report the full £50.00 as turnover, then claim the fees as expenses.
> Important: HMRC receives marketplace sales data from eBay under new reporting rules (from January 2024). Ensure your declared turnover matches eBay's records.
Deductible eBay Expenses
These costs reduce your taxable profit:
Platform fees:
- eBay final value fees (typically 10-15%)
- Listing fees and insertion fees
- eBay Store subscription
- Promoted listings costs
- PayPal fees (if still using PayPal)
- eBay Managed Payments fees
- Currency conversion costs
- Royal Mail and courier services
- Packaging materials
- International shipping and customs fees
- Product purchase costs
- Wholesale supplier payments
- Returns and refunds processing
Stock Valuation for eBay Businesses
Accurate stock records are essential:
Valuation method:
- First In, First Out (FIFO)
- Weighted average cost
- Specific identification (for unique items)
- Value at lower of cost or net realisable value
- Account for slow-moving or damaged stock
- Consider seasonal demand fluctuations
Home Office Deductions
Many eBay sellers work from home:
Allowable claims:
- Proportion of mortgage interest or rent
- Utilities based on floor space used
- Business broadband costs
- Home storage space for stock
Equipment and Capital Allowances
Business equipment qualifies for AIA relief:
- Computers and printers
- Photography equipment for listings
- Scales and packaging stations
- Storage shelving and racking
- Delivery vehicles
Record-Keeping Requirements
eBay sellers should maintain:
- eBay sales reports (downloadable monthly)
- PayPal/payment transaction records
- Purchase invoices from suppliers
- Stock movement records
- Business expense receipts
International Sales Considerations
Selling internationally adds complexity:
EU sales (post-Brexit):
- Export declarations may be needed
- Understand buyer's import VAT liability
- Currency fluctuations affect profit
- Keep records of postage costs by destination
- Factor in returns shipping costs
- Consider eBay's Global Shipping Programme fees
Trading vs Investment
Different eBay selling activities have different tax treatments:
Trading business (CT600):
- Regular buying and selling for profit
- Ongoing business activity
- Business structures and systems in place
- Selling personal items occasionally
- No profit motive
- Capital gains rules may apply instead
Common Mistakes to Avoid
eBay sellers often make these errors:
- Underreporting income - eBay now reports to HMRC
- Missing fee deductions - Many sellers forget PayPal fees
- Poor stock records - Makes profit calculation inaccurate
- No business-personal separation - Mix up personal and business sales
Scaling Your eBay Business
As your business grows:
- Consider VAT registration (threshold £90,000)
- Evaluate warehouse vs home storage
- Look at staff costs and employment
- Review multiple sales channel integration
Filing Your CT600
TinyTax makes CT600 filing simple for eBay sellers:
- Import your figures from accounting software
- Clear guidance on expense categorisation
- Automatic tax calculations
- Direct submission to HMRC
Key Takeaways
- Report gross sales before eBay deducts fees
- All platform fees are deductible expenses
- Accurate stock records are essential
- Home office costs can be claimed proportionally
- HMRC receives eBay sales data directly