As an example, let's say a friend of yours is selling their car, and they also need some DIY work doing on their house. If you do the DIY work for them, and they give you the car as payment, do you need to pay tax on this?
asked Jul 20, 2019 at 21:34
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I'm voting to close this question as off-topic because it is answered here: money.stackexchange.com/questions/21446/…– BlueDogRanchJul 20, 2019 at 22:10
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6@BlueDogRanch it’s not off topic here just because it’s also on topic at one of our sister sites– Dale M ♦Jul 20, 2019 at 23:05
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1 Answer
Yes
If the transaction is one that would attract tax if settled by cash, it attracts tax if settled by barter.
For example, a private person selling their second hand car is not a taxable transaction. If done by a second hand car business it is. Similarly, a mate doing some DIY for you is not taxable in your hands. A mate who’s business it is to do DIY work (e.g. a builder or other tradesperson) doing work on your business premises is different.
However, if it is clearly a transaction when something of value is traded for something of commensurate value then tax is payable. Where it gets murky is in a situation of reciprocal gift giving.
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2Selling a car privately and doing some one-off DIY are not similar at all. The former is selling something for what you have previously paid with money that would have been taxed when earned, thus it makes sense not to tax again when selling the car. A car for one-off DIY is payment for work (although paid not in money) that needs to be taxed like any other work income. Jul 21, 2019 at 5:46
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1A mate who does some DIY work for you without pay (or paid in beers at the pub) is not taxed. A mate who does some DIY work for you, and then you pay him £200, whether he has a business or not, is taxable. Most of the time, HMRC will not know about it and it will not be taxed. Jul 21, 2019 at 16:15
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If a "private person" sells a car for more than they paid for it, income tax will be due. Jul 21, 2019 at 21:23
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@GeorgeWhite only if you are a “trader” - theregister.co.uk/2007/02/09/ebay_uk_traders_tax_guidance– Dale M ♦Jul 21, 2019 at 21:42