As the New Year prompts many to declutter their homes, online platforms such as Vinted, eBay, and Etsy offer easy avenues to resell unwanted items. While this can be a great way to earn extra cash to offset January expenses, sellers may not be fully aware of the potential tax implications involved.
Whether an online sale is subject to tax largely depends on the seller’s intention and the value of the items sold. Casual sellers reselling personal belongings typically won’t owe tax unless an individual item sells for over £6,000 and generates a profit, triggering Capital Gains Tax liabilities. However, if you’re regularly selling items or buying goods to resell, this activity could be classified as trading.
HM Revenue & Customs (HMRC) has set thresholds to determine when sellers must declare income from online sales. For trading activities, income exceeding £1,000 per tax year typically requires registration for Self Assessment and the payment of any due taxes. Digital platforms are now obligated under UK law to report sellers’ information to HMRC if certain sales thresholds are met. For example, Vinted reports sellers who achieve either 30 or more sales, or sales exceeding £1,700 within a calendar year.
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Lee Murphy, Managing Director of The Accountancy Partnership, explains that HMRC uses data from these platforms to cross-check declared income. Sellers who exceed the £1,000 trading allowance without reporting may receive reminder notices, which should not be ignored. Failure to respond can escalate to full tax investigations or even criminal inquiries.
For individuals running a reselling side hustle, detailed records are essential. Keeping track of sales, profits, and deductible expenses such as postage and packaging can help accurately complete tax returns and reduce tax liabilities where applicable.
In summary, understanding where your online sales fall within HMRC’s rules is vital. Selling personal items occasionally is unlikely to attract tax, but those trading regularly or making significant profits must be mindful of their tax responsibilities to avoid unexpected enforcement action.