20i Domains

Taxation of domain profits

Discussion in 'General Board' started by Richard K, Oct 12, 2020.

  1. Richard K

    Richard K Active Member Exclusive Member

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    This won't be of concern to me for some time to come (if ever). I only got into domaining around 18 months ago, and in that time have bought a lot of domains to get myself started and only sold a handful so far ... so I won't be into profit any time soon!

    That said, I am curious to know whether domain profits are taxed as income or capital gains?

    I suppose a lot depends on the circumstances. In my case, I probably spend an hour or two on this most days (although there have been periods when it's been much more), and they are all bought with the intention of selling (most of them being posted on a for-sale landing page very soon after being purchased, except for a handful where I suspect they will be worth more if I wait). I don't know whether the number of domains is relevant (i.e. make it look more like a business), but if so I have nearly a thousand at the moment and for the foreseeable future will probably be maintaining it at around that level.

    Sorry to trouble the good people on here with a boring tax question, but I did google it first and just ended up very confused!
     
  2. Domain Forum

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  3. Trauiner United Kingdom

    Trauiner Active Member

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    It is mainly dependent on how often you do it and if it's considered a main business activity. How many you have and how often you buy/sell does affect it, yes.

    Based on how many hours you spend on doing it, you stating you've got nearly 1,000 and sold quite a few, I would say you fall into the situation of them being taxed based on income.

    Always best to double-check with an accountant.

    (Don't take what I say as tax advice etc etc. Disclaimers and all that.)
     
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  4. stevelook2 United Kingdom

    stevelook2 Active Member Acorn Supporter

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    It would depend on how you are operating.

    Self Employed Sole Trader or Limited Company

    Self Employed the purchase cost etc would be classed as allowable expenses, whereas the sale would go through as just that.

    Whether your making a profit or not it should be declared, so it is possible to operate at a loss and declare this and there would be zero tax due,

    Best advice would be to speak to an accountant
     
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  5. Richard K

    Richard K Active Member Exclusive Member

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    Thanks, @Trauiner and @stevelook2, for your helpful replies. I agree with you both that as and when it becomes relevant I should ask an accountant, but a few informal pointers in the meantime are always useful to bear in mind so thanks!
     
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  6. Ben Thomas

    Ben Thomas Well-Known Member

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  7. Lovekraft United Kingdom

    Lovekraft Well-Known Member Full Member

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    If you actively buy and sell then yes you are liable to paying tax. I was advised years ago anything over around 10 buys / sells is considered active.

    PS - Not a professional either so always seek professional advice.
     
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  8. WalkinDude United Kingdom

    WalkinDude Well-Known Member

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  9. Richard K

    Richard K Active Member Exclusive Member

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    Thanks all for your thoughts and input – hugely appreciated :)
     
  10. William United Kingdom

    William Active Member

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  11. Richard K

    Richard K Active Member Exclusive Member

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