You may have seen articles, videos or other sources of information which say that platforms such as Ebay, Vinted and Depop are reporting information to HMRC of seller’s sales.
This has caused some people to believe that they can no longer sell their second-hand items on these platforms as they will need to pay tax on the sales.
This article is here to reassure you that you can continue to sell your second-hand items and you will not need to pay tax or declare this income. These rules are not new, they have always been in existence. Let me explain in more detail.
Selling second items
When you sell your clothes, children’s clothes, children’s toys, books, music or other items that you originally bought for personal use and then don’t want them anymore, this is not considered as trading. The money received is not income and does not need to be reported anywhere. It does not need to go on any tax return and HMRC do not need to be made aware of this income.
If you have items that you no longer want, please continue to sell these on the various available platforms. It will allow you to generate additional cash and means that someone else can purchase them at an affordable price to them. You will not need to inform HMRC of this activity and will not be taxed on this money received.
When are you trading?
HMRC expects you to declare your income and expenses when you undertake a trading activity.
If you go out and buy items that you later intend to resell, this is considered trading. You do not need to have a minimum number of items you are planning on selling, and you do not need to generate a minimum amount of money: when your intention is to buy and then sell at a profit this is considered trading and should be declared to HMRC, with tax paid accordingly.
There is such a thing as a trading allowance. This is an annual amount of £1,000 that each individual is entitled to receive as income and not have to declare it to HMRC. The trading allowance is there for a hobby business or a business where you want to try something out, or when you do not earn much from the activity you do.
Therefore, if you are buying items and intending to sell them but generate less than £1,000 in income (before any costs are deducted), you do not need to report this to HMRC. However, if you generate more than £1,000, you would then deduct your expenses and report to HMRC.
Finally
So finally, if you are simply selling your second-hand items, nothing needs to be declared to HMRC and no tax will need to be paid.
If you are buying items with the intention of selling at a profit, you may need to declare this depending on the amount received.
You can find me, along with a video on this topic, on TikTok.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Send us your questions through the Contact Us page on our website.
Chantal Baker is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please follow them on their various social media channels.
