The sun is shining, the trees are starting to blossom and the beer gardens are full of smiling faces: spring has officially sprung.
If you’re getting ready to do a spot of spring cleaning, you might be planning to sell your old clothes, toys or gadgets on platforms like Vinted, eBay or Etsy. But many people worry about whether they’re going to fall foul of the rules, particularly since online platforms started reporting sellers’ activity to HM Revenue and Customs (HMRC) last year.
Fortunately, I have written extensively about the rules regarding selling online, and I’m here to explain them to you.
The first thing to keep in mind is that if you’re making £1,000 or less from selling stuff online within a tax year, you’re likely to be in the clear. That’s because everyone gets what’s called a ‘trading allowance’.
If you’re making more than £1,000 selling online within a tax year, whether or not you need to declare your earnings depends on a few factors, which I explain below. Keep reading for how to stay within the rules when selling stuff on Vinted, eBay, Etsy and more.
Read more: How to get paid for donating recycling clothes
Selling your old stuff? You’re unlikely to need to pay tax
Remember when I said that everyone gets a £1,000 trading allowance? Well, let’s break down what ‘trading’ really means.
In brief, trading means working for yourself. This includes any kind of self-employment, casual work like babysitting and buying and selling products with the intention of making a profit.
This is what many people get confused by when selling on platforms like Vinted and eBay. Selling your old stuff isn’t trading, as you didn’t buy your child’s toys with the intention of selling it on later for a profit. Therefore, it’s unlikely that you’ll need to declare this income to HMRC or pay tax.
However, if you’re buying, say, kids’ toys from Aldi with the intention of selling them on Vinted for double the price, this is trading, as you’re acting with the intention of making a profit.
There is an exception to this that won’t apply to most people: if you sold a single item for £6,000 or more, you may need to declare this to HMRC and pay capital gains tax. The rules surrounding this tax are a bit more complex, but you can check whether you need to declare your earnings using this tool on Gov.uk.
When you need to declare your earnings
As I explained above, if you’re buying or obtaining items with plans to sell them for a profit then it’s considered trading. If you make more than £1,000 doing this within a tax year, which starts on 6 April and runs until 5 April the next year, you’ll need to declare your earnings to HMRC by filing a self-assessment tax return.
You’re allowed to make £1,000 a year thanks to your trading allowance, so if you’ve made this amount or less, you won’t need to declare your income. However, it’s worth remembering that the allowance is £1,000 total for all forms of trading, so if you’ve made £800 trading on Vinted and £300 on eBay, you’ll still need to declare this.
It gets a little more complicated for self-employed people, as you’re most likely using at least some of your trading allowance already. For example, if you make £950 from your dog walking business and £100 selling on Etsy, this will take you over the trading allowance, meaning you’ll need to report this income to HMRC.
It may also be worth checking your chosen platform’s rules, as some require you to have a different type of account if you’re trading. On Vinted, you’ll need a Vinted Pro account; on eBay, you’ll need a Business Account; on Gumtree, you’ll need a Gumtree Business Account.
What are HMRC’s reporting rules for online platforms?
As of January 2024, online platforms have had to collect data on user’s selling activity. Certain data is now shared with HMRC on a yearly basis, making it even more important to stay within the rules.
Your selling activity will be passed on to HMRC if you’ve made 30 or more sales or you have earned €2,000 (which is currently around £1,736) within the calendar year.
This doesn’t necessarily mean that you’ll need to declare your earnings or pay any tax. For example, if you have a huge clearout and sell 30 items, but you’re not trading, you don’t owe tax just because the platform has passed on your activity to HMRC.
You also aren’t absolved from needing to declare your income just because you haven’t met this threshold. Say you’ve made your own candles on Etsy and sold 29 of them for £40 each – your activity won’t automatically be passed on to HMRC, but you have made more than £1,000 working for yourself, so you’ll need to file a self-assessment tax return.
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