Does anyone know what exactly HMRC class as “bank charges”? I always assumed that bank charges would be stuff like overdraft fees, fees for having a business account/ for writing cheques and all that stuff.
Now this is where I’m a bit confused and a bit worried - I use paypal to facilitate all of my incoming payments, and as everyone knows, they charge fees - “paypal fees” - on each transaction. I don’t think paypal even are a bank - but my fees are about £400 a month, and these are categorised on QF as “bank charges”.
Where do I stand on this, do these fees count as bank charges by HMRC definition? In which case, I’m paying well over £500 a year and would seem to have a problem?
In our previous year end accounts, our accountant put our Ebay/Paypal/Merchant fees down as bank charges. I don’t think ours were as high as yours though. Didn’t know there was a limit on this. Can’t really see where else these would be added.
As you can see in my first link, it says that you can not claim more than £500 a year on cash basis, but it doesn’t make it clear exactly what counts as bank charges - I would assume it means overdraft fees etc.
Box 26 does make it look more like it’s for “Borrowing” rather than every day banking. Very confusing. The more I seem to learn the more complicated it gets!
Hi
PayPal does not have a UK bank licence so their handling fees are not bank charges although they can be accounted for as such.
If I were you I would create a nominal account say 7907 and name it Selling fees, or use a “direct expense” like n/c 6900 Miscellaneous Expenses, as PayPal fees are taken directly from each sale made.
Either of these codes can be used for any selling fees like Ebay fees, Klarna fees, PayPal fees.
You could even phone the HMRC and ask them if it would be OK with them to use box 19 (Other allowable business expenses) on the self employment tax return for PayPal and Ebay fees
I wonder if Paypal and Ebay fees could go in box 30 on the tax return?
I’ve created a new nominal account for paypal fees “Merchant Handling Fees”, and as I’ve got a paypal feed set up which automatically tags the payments to “Bank Charges” does anyone know how I can change that to the new nominal account?
Yes, box 30 on the full self employment pages is the same as box 19 on the short self employment pages.
To change the auto tagging, open the bank tagging rules from the banking tab drop down list, select Bank tagging rules, find the rule and open it. You can now change the nominal account it taggs it to, I think the drop down list for the auto posting are listed by name only
I’ve just tried to do this and there are no rules showing when I go to the bank tagging rules. My patpal feed is still automatically tagging to bank charges and there is no way to change it?
Yes Paypal is showing as a supplier in my account, and I’m able allocate payments to paypal to a different code “Merchant Handling Fees” on that screen, but it only works if I manually add a paypal payment.
Anything brought in through the paypal feed goes to “bank charges” for paypal charges and “general sales” for sales.
I have discovered that any payments to paypal which are tagged as bank charges I can move code to merchant handling fees manually, which is a workaround.
The auto-paypal charges will always go to “bank charges”, there’s no option to change this I’m afraid. You can either bulk re-code them, journal them or just switch of auto-tagging entirely on the PayPal settings.
