
Do you sell used items online? A common question is whether you have to pay tax on selling second-hand goods. This will depend on the amount you earn and whether HMRC considers you a trader. Although there aren’t any new tax rules that have been introduced to sellers, platforms like eBay and Vinted now have to report to HMRC. We look at the tax implications if you’re regularly selling second-hand goods and what to expect from the online platforms.
Since January 2024, HMRC has implemented a new obligation requiring digital re-selling platforms to share the income details of sellers using their online marketplaces. As a result, companies like eBay, Vinted, and Airbnb must declare when a seller has reached £1,725 in sales or has sold over 30 items. The first deadline for this information is the end of January 2025.
Do I need to declare earnings on second-hand goods?
In most cases, you won’t be liable to pay tax if you (as a person not as a business) have not sold items for a profit. Using Vinted as an example, it’s unlikely that a profit would be made from selling second-hand clothing on this re-selling platform.
If you were to go over the threshold for sales or the number of items sold, Vinted will ask you to complete a ‘seller’s report’. This is how Vinted shares your information with HMRC. Completing the seller’s report and sharing information doesn’t necessarily mean you are obliged to pay taxes on your Vinted sales.
Selling your own personal items (and not making a profit on them) is not taxed. Remember, HMRC reporting doesn’t require you to do anything new regarding your taxation obligations. Also, it’s unlikely that you’ll have to show proof that you didn’t make a profit. So, even if you meet one of the criteria and complete a seller’s report, it doesn’t mean you’re obliged to pay taxes.
However, things can become complicated if you are selling second-hand goods for your family. If you receive items from family members, sell them, and then keep the proceeds for yourself in excess of £1,000, you will be liable to pay tax. The critical point here is whether HMRC sees you as an individual, operating as a business, or simply clearing personal items.
Tax-free trading allowance
Everyone has a tax-free trading allowance of £1,000. Whether you’re a company or a sole trader, this allowance allows you to earn up to £1,000 in trading income without needing to report it to HMRC.
As mentioned above, you will only be expected to pay tax if you go above this threshold. However, if your sale proceeds from selling items for yourself or family members exceed the allowance, you must report this income on a self-assessment tax return.
What do I need to do?
Our financial planners have provided the following response:
“Vinted will get in touch with you directly (by the end of the year) if you have either sold over £1,725 worth of clothing OR if you have completed more than 30 sales.”
There are a few things to be aware of and to do if you want to ensure you are not approached to pay tax:
- Look out for a request from eBay or Vinted to complete a seller’s report. The report will probably ask questions such as whether you’ve made a profit and if you are trading as a business.
- If you are selling items for family members and not keeping the sale proceeds, then use a clear transaction reference name. This will demonstrate that you are paying the proceeds to family members.
- If you are keeping the proceeds, make sure the amount doesn’t exceed £1,000. If it does, then complete a self-assessment tax return. We can recommend accountants to assist you with this – please speak to our team for details.
Fixed-fee financial planning
At Balance: Wealth Planning, we have a fixed fee approach to our financial planning services. So, whether you are a start-up or an established second-hand sales trader, we can help your business become more tax efficient. We can also advise you on your financial planning, from pensions to investments and savings strategies.
Have you heard our recent news? We have won Money Marketing’s Best Retirement Advice Firm and Next Generation Advice Firm.
For financial planning and tax advice, get in touch to speak to our financial planning team.
Sources:
https://fullfact.org/economy/side-hustle-reporting-ebay-vinted-income-not-new-tax/