In recent years, online selling has become a popular way for people in the UK to declutter their homes, earn extra income, or even establish full-fledged businesses.
However, with evolving regulations, many online sellers are unsure of their tax obligations. While rumours of a new tax on selling unwanted items online have circulated, these claims are unfounded.
Instead, changes implemented in 2024 focus on reporting requirements for digital platforms.
This blog explains the implications of these changes and clarifies what online sellers need to know about their responsibilities to HMRC.
The Truth About Taxes for Online Sellers
There is no new tax for individuals selling personal items online, like clothes or toys. The rules for such sales, such as selling outgrown baby clothes or holiday jumpers, remain unchanged.
What has changed is the way that digital platforms report information to HM Revenue and Customs (HMRC). Online platforms like eBay or Vinted are now required to share sales data and some personal information for 2024 with HMRC by the end of January 2025.
This change is about improving transparency in reporting, not introducing new taxes for online sellers.
What Are the New Reporting Requirements?
Starting in 2024, online platforms like eBay, Vinted, and Airbnb must report certain sales and personal information to HMRC if sellers meet specific thresholds.
This includes:
- Selling at least 30 items or earning approximately £1,700 (€2,000) in 2024.
- Providing paid services such as holiday rentals.
These platforms will inform sellers whose data has been shared with HMRC. Importantly, this reporting does not automatically mean you owe taxes.
However, sellers must determine whether they need to register for Self Assessment based on their income and activities.
When Must You Register for Self Assessment?
You must register for Self Assessment if your income from online activities exceeds £1,000 before deducting expenses.
This applies to various scenarios, including:
- Trading Goods: Buying items to resell or making goods specifically to sell for profit.
- Providing Services: Offering services such as food delivery, dog walking, or property rentals through platforms.
- Content Creation: Activities like social media influencing, podcasting, or creating online videos.
If you’re uncertain whether your additional income is taxable, HMRC offers helpful tools to check your obligations and ensure compliance with tax regulations.
Tax Implications for Personal Possessions
Selling personal possessions usually doesn’t attract Income Tax unless the items are highly valuable. However, you may be liable for Capital Gains Tax (CGT) if an item is sold for more than £6,000.
This threshold also applies to sets of items, such as:
- Matching ornaments (e.g., vases or statuettes)
- Books by the same author
- Chess pieces or other collectibles
Example:
If you sell a painting for £8,000 that you originally bought for £1,600, your profit of £6,400 may be subject to CGT.
Always consider the item’s value and the applicable tax rules when selling personal possessions online.
Understanding Online Selling Scenarios
1. Selling Goods for Profit
If you consistently buy or create goods to sell online, you are considered a trader and must report your income. Examples include:
- Upcycling Furniture: Refinishing old furniture to sell for a profit.
- Importing Items: Purchasing products from abroad to resell online.
- Reselling Clothes: Buying items at car boot sales with the intention of reselling them for a profit.
2. Providing Services
Activities like babysitting, dog walking, or gardening, promoted through online platforms, also count as taxable income.
For example, advertising nanny services online and earning income requires reporting to HMRC.
3. Content Creation
If you’re an influencer or content creator, income from advertisements, gifts, or services received from brands must be disclosed.
For instance, beauty influencers receiving monetary payments and free products for reviews may need to report these earnings.
4. Renting Property
Earning income through property rentals, including short-term lets via platforms like Airbnb, is subject to tax.
For example, renting a spare room regularly qualifies as taxable income and must be declared.
Using HMRC Tools to Check Income Obligations
HMRC provides tools to help online sellers determine whether their income needs to be reported. These tools simplify the process, ensuring sellers comply with tax regulations.
To use these tools effectively, sellers need to gather essential details, such as:
- Total income received or expected during the tax year.
- Information on shared income with others, if applicable.
- Other sources of income that may influence tax liabilities.
It’s important to report income for the tax year, which runs from 6 April to 5 April, even if platforms provide data based on the calendar year. This ensures accurate reporting and avoids discrepancies with HMRC.
Information Collected by Online Platforms
Digital platforms are now required to collect and share seller information with HMRC. These measures enhance transparency and help HMRC monitor taxable income effectively.
Platforms must:
- Verify and collect details about the seller, including personal and account-related information.
- Share sales data for accounts meeting the reporting thresholds with HMRC.
Although this data-sharing improves oversight, it doesn’t automatically mean every seller owes taxes.
Only those whose activities qualify as trading or exceed certain thresholds need to report and assess their tax liabilities.
Tax Rules for Selling on Vinted
Selling personal items on platforms like Vinted is generally not taxed in the UK. If the total amount you earn over a year is less than what you originally paid for the items, there’s no tax obligation.
Even if you sell an item for more than £6,000, the Capital Gains Tax (CGT) only applies to the profit exceeding your tax-free allowance of £3,000.
Reporting Criteria for Vinted Sellers
HMRC requires platforms like Vinted to report seller information if you:
- Complete 30 sales or more within a calendar year.
- Sell items worth over €2,000 (~£1,700) annually.
Completing a report does not mean you owe taxes unless you’re trading for profit. For clarity, consult HMRC guidelines or a tax advisor to understand your obligations.
Conclusion
The new reporting rules for online selling focus on transparency, not introducing new taxes. If you are an occasional seller clearing out personal possessions, you are unlikely to face tax obligations.
However, regular traders, service providers, and content creators must understand their responsibilities to HMRC. Use the available tools to determine whether your income needs to be reported, and stay informed to avoid surprises.
Remember, compliance with these guidelines helps maintain trust and clarity in your online activities.
