Life
Do I need to pay tax on stuff I sell online?
Our money maven Rosanna Spero advises whether you should be worrying about HMRC’s new rules on trading on sites like eBay
January 26, 2024 11:07
By, Rosanna Spero
2 min read
Our money maven Rosanna Spero advises whether you should be worrying about HMRC’s new rules on trading on sites like eBay
January 26, 2024 11:07ByRosanna Spero, Rosanna Spero
To help make ends meet I have been selling unwanted clothes and household items on eBay, Vinted and Ziffit. It doesn’t make me a huge amount of money, but helps pay for the new clothes and bits the family needs. I read last week that I will now have to declare this money and pay tax on it. It doesn’t sound fair as I have already paid for and own the items, is this right?
If you are just selling a few unwanted household items and clothes then I don’t think you need to worry about this new rule. It is only designed to affect people who are trading regularly and making a large profit from these trades without telling the taxman. That doesn’t sound like your situation.
The taxman is looking to catch people who trade, which it defines as: “If you buy goods for resale, or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profit.”
Key to this new ruling, which came into effect on January 1, is how much money you make. Everyone has an annual tax free allowance of up to £1,000 for trading. HMRC wants to know about anyone making more than this each year. The rule change you read about now requires all online platforms, such as eBay, Uber, Deliveroo and Vinted, to routinely report details of trades and services people are providing, and their linked accounts, so the taxman can check there is no tax evasion.
Trading is defined as an activity with the aim of making a profit. People who make jewellery on the side and sell it on Etsy for example would fall into this category, even if it is not their main occupation. It is income from these activities HMRC is interested in. It says in its guidance: “If you are just selling some unwanted items that have been laying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay tax.” If you’re worried that you have been selling more than you thought, or want to do more in the year ahead HMRC has useful guidance at www.gov.uk.
Victoria Todd, Head of the Low Incomes Tax Reform Group said: “We understand there is a lot of worry among people who sell via online platforms about the changes, including for those who sell personal items they no longer want or to clear space in their home. However we want to reassure sellers that there is no new ‘side hustle tax’ and no changes to the tax rules about what income needs to be declared to HMRC or when it needs to be declared. In particular, people selling unwanted personal items such as their children’s old clothes or toys are not likely to be ‘trading’. Therefore, even if it is a significant amount, any money they make is generally not taxable.”