Discussion in 'General Board' started by bobby sands, Mar 22, 2006.
when *someone* sells a domain is *someone* supposed to pay tax on it?
The short answer is this:
When an individual sells a domain name for more than what they paid for it then they have made a profit.
As far as the tax man is concerned there are two kinds of profit - capital gains and trading profits.
If you buy and sell a lot of domain names then you're effectively a self employed domain trader running a business, so the profit would be a trading profit.
If you are not a domain trader and you bought, for example, your surname.co.uk five years ago and some big company then comes along and buys it for £50k then this would be probably be a capital gain because you're not running a business based on domain names.
You can liken the above example to buying a valuable antique vase for £5 at a car boot sale. If you later sell it for £5k then the profit will be a capital gain UNLESS you are an antiques dealer - in which case antiques is your business so it's a trading profit.
Always get your own professional tax advice before relying on the sh!t that I post though
What's a domain?
What money officer?
BB, Am I right that a trading profit is better (lower tax rate) than Capital gains tax ?.
Yup, but bear in mind it's the budget today....you never know, they could abolish capital gains tax (J2 is an optimist)
It really depends on your personal circumstances and what other sources of income / gains that you have.
If you have a salary or income from another business then you're probably better off if the domain is a capital gain. This is because there's a no tax to pay on your first £x,000 worth of capital gains each year. Off the top of my head I can't remember what the latest figures for this year are, hence the "x".
I think it's about £8,500 per year at the moment but that could change later today
Local Shops Adult DVDs HPI Check Domains
The first £7,500 of a capital gain is tax free (that is per individual ie granny son daughter mother mother-in-law etc etc) If you get a sale for 50k the likely hood is you will be paying higher rate tax, either through cap gain or income tax.... If your not already paying higher tax it might be prudent to sale the domain as a business asset...
Just to protect myself (this is the ramblings of an old fool and does not consitutes advice, you should consult a tax professional for tax advice)
If you make spelling mistakes in your disclaimer does that make the disclaimer worthless?
Separate names with a comma.