advice Domain selling - tax implications in the UK

[Truespin Domains]

I dabble with domains on the side, but have recently sold a few for reasonable sums of money.

In the past I treated it like selling junk on ebay and didn't worry too much about the tax implications, but as the income from it has increased I want to understand more.

I'm familiar with capital gains tax, and from what I've read this is what I think applies, but it seems like a bit of a grey area for an individual that flips domains almost as a hobby.

Anyone in the UK with any experience?

 

[MadAboutDomains]

I'm familiar with capital gains tax, and from what I've read this is what I think applies, but it seems like a bit of a grey area for an individual that flips domains almost as a hobby.

You're buying them to sell them. That's no longer passable as a hobby I'm afraid, it's trading in domains therefore it's an activity that you do to make money, so you can't claim capital gains, it's income.

There is a useful HMRC video called "Am I trading?":

For instance, I can't claim capital gains on selling a house if I am in the business of buying and selling houses.

I can't sell a piece of equipment and claim capital gains on each sale when the whole point in my business is that I buy and sell said equipment.

You can't buy and sell domains for profit and then claim capital gains on every domain that you sell.

That's how I understand it, I hope that helps.

 

[Truespin Domains]

You're buying them to sell them. That's no longer passable as a hobby I'm afraid, it's trading in domains therefore it's an activity that you do to make money, so you can't claim capital gains, it's income.

There is a useful HMRC video called "Am I trading?":

For instance, I can't claim capital gains on selling a house if I am in the business of buying and selling houses.

I can't sell a piece of equipment and claim capital gains on each sale when the whole point in my business is that I buy and sell said equipment.

You can't buy and sell domains for profit and then claim capital gains on every domain that you sell.

That's how I understand it, I hope that helps.

Thank you. There seemed to be some grey areas because a) sometimes I had previously used the domains for my own projects - so the intention wasn't initially to sell them and b) I'm not a business.

But with tax it's best to be cautious, so will declare.

 

[MadAboutDomains]

You don't need to have a registered business, you will be classed as self employed for the declaration of the additional income.

I also have my own projects and if I sold the domains that I use for those projects then I'd be declaring the income.

I hope that helps.

 

[phaethon]

I had a chat with @D Haynes about tax from sales and parking revenue in the UK. Are there any other guys from the UK here? How do you declare your income from domain sales / parking?
I'm self employed btw. Do you declare it as sales or as investments? Could renewals be used as a business expense?

 

[phaethon]

UP! Lol no UK domainers on board? Maybe they don't pay taxes or hold co.uk that sells once a decade?