Tax Help on Domain Sale

[jilo]

Hi all,
I am about to sell a domain name for around £6,300. Am I right in thinking I don't need to declare this, as it's under the CGT threshold?

I work part time in the photography industry, but bought the domain name for a project (backorder from NameJet for $69). Now I have got an offer, and will be selling it for around £6,300 - it's currently in Escrow.


I buy and sell a couple of domain names per year, but have never had a sale as large as this, so I'm unsure as to what to do now.

Also, late last year I opened a new website and it has started to make money - £195 last month, £65 so far this month.

I've never had to do self assessment before, but I'm guessing I need to register for self assessment now, right?

If so, do I need to inform my current employer?

 

[Admin]

You can register for self assessment anytime, it's just a couple more pages on your tax return. You dont need to inform your employer, unless your employment contract with them has conditions around what work you do outside theirs.

I take all domain sales as part of income, is there another way to handle them?

I also keep a note of any hosting, domain name and other costs associated as these should be deductible.

Tax is painful but unavoidable.

Admin

 

[Lovekraft]

If you buy domains with the intention of developing or selling them for profit then yes any sales and profit should be declared as income to the tax man as opposed to CGT.

If it is a one off sale as an individual then perhaps then it can be treated as CGT. Because I set out to buy and sell domains I choose to treat all sales as income.

Personally, I would probably pay less tax if I declared my sales as CGT but then I could end up being questioned about my original intention for buying them in the first place so I'd rather pay up to avoid ever being hounded by the IR! I'm sure the IR advice to me a few years back was if you sell say more than a few domains in a year then you are likely to be considered trading in them so CGT would not apply in this case.

The current tax allowance is £8,105 but you do need to include your part time earnings on top of your sold domain(s).

 

[jilo]

Thanks for the answers. I'll be registering for Self Assessment today, and putting this & any other sales as part of my income.

 

[martin-s]

This is one off income, rather than capital gains I would say..? Should be declared and taxed I imagine.

If you haven't already, you also need to register as self employed and pay appropriate NICs.

 

[jilo]

If you haven't already, you also need to register as self employed and pay appropriate NICs.

I wouldn't class myself as self employed. I have a part time job, which I pay PAYE tax & NI on.

 

[Lovekraft]

You can be employed part time / full time as well as being self employed at the same time.

Basically if you have the need to fill out a self assessment then you are considered self employed. Any wages you are paid by your employer are declared alongside earnings made from self employment.

 

[fenland]

Yes but you have undeclared income..

read here