Millions of people are selling things online these days to help with the cost-of-living crisis – or just to turn old stuff into useful cash. Nowadays that is known as a “side hustle”. Recent press articles imply that sellers must pay tax on the money they make, and that His Majesty’s Revenue & Customs (HMRC) is preparing to write to everyone who does it demanding tax. The facts are a bit different.
Selling your own things from your attic or cupboards is not trading. It is, well, just selling your old stuff. So income tax is not due. However, if you sell a personal possession for £6,000 or more and for considerably more than you paid, then capital gains tax may be due on the gain. Some things, such as cars, are usually exempt. Search gov.uk for “capital gains tax” for more details: it’s complicated, but most people needn’t worry about it.
If you buy things in order to sell them for a profit, or you make things or paint pictures to sell them, then income tax may be due on the proceeds. Everyone can earn £1,000 a year from trading without paying tax. (This is a turnover tax, not a profits tax, so if your turnover exceeds £1,000 a year, then you must tell HMRC and the excess will be liable to tax.) Alternatively, you can treat it like a business and set off all your expenses against the sale price to get your profit. That is then potentially taxable, however little it is.
If you have a business like that, you must register for self assessment by 5 October in the tax year after the business started. How will HMRC know about your sales?
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From this year, online marketplaces such as eBay and Vinted will demand more details from you and collect data on your annual turnover in the tax year. They must report that to HMRC from 31 January 2025. It is possible that HMRC will just go by the money you make and write to you implying that you must pay income tax, even if you are not “trading”. So, if it might affect you, I recommend you start keeping records of every sale now, and where the things you sell came from.