Do I need to do anything differently if I sell items on eBay?

You may have seen on the news recently that there have been changes to the way HMRC will communicate with certain marketplaces, such as Vinted, Depop and eBay, but what the news doesn’t explain is what these changes are and what this means to you. 

The good news is that there have been no changes to the legislation, so you shouldn’t have to do anything differently. The changes are purely related to what information online marketplaces will provide to HMRC to help them identify if anyone has a side hustle they should be declaring. 

In case you aren’t sure of the current rules, we have outlined them below for you. If you're a client and would like to have a chat with us about your position, please give us a call on 01264 721670 or email our Tax Team on tax@thewowcompany.com. 

Can I sell unwanted items without declaring these on a tax return?

In most cases, the answer to this will be yes. There have been no changes to the law and therefore no changes to the point you will need to declare any income. Selling unwanted items from around the house is generally not seen as a trade and therefore HMRC would not expect you to consider this as income that you need to pay tax on. The extra pocket money will be yours to keep!

When does it become a trade that needs declaring?

HMRC may think you are trading if you start to meet certain criteria, known as the “badges of trade”. These badges look at several factors, including your motive for the transaction, the frequency of these transactions, and the time between the purchase and sale of the item. There are other factors to consider, but generally speaking, if you regularly purchase items and sell them for a profit soon after, this is when HMRC may consider the transactions to be a new trade. If this applies to you, we would recommend chatting with your tax advisor to look into declaring this information on a tax return if you haven’t already done so.

There is more good news though, each individual is entitled to a £1,000 trading allowance, so only income made above this figure will need to be declared on a tax return. Otherwise, you shouldn’t need to complete a return, but we would still recommend keeping records for good practice.