HM Revenue and Customs (HMRC) has issued a cautionary note to those harbouring misconceptions about selling items online. The government body pointed out the widespread misunderstanding that individual sellers will be taxed on any item they sell.
However, it clarified that details of individuals selling on digital platforms like Etsy or eBay could be collected and forwarded to HMRC by these platforms. This is due to the UK’s participation in the Organisation for Economic Development (OECD) Model Reporting Rules for Digital Platforms, which defines a seller as anyone registered on a digital platform to sell goods or services, even if they’re not directly offering the goods or services themselves.
Despite this, HMRC reassured that it is “unlikely” one would pay income tax for selling goods online. In a statement on X, it said: “Reality: If you’ve sold a few personal items it is unlikely you will need to pay any Income Tax on this. But, if you buy or make goods to sell for a profit, then you’re likely to be trading and might have to pay tax on your profits.”
Accompanying this was an image stating: “Myth: I’ve sold a few personal items online and now I’ll have to pay Income Tax”.
Official guidance from HMRC emphasises that even if a platform reports your details to HMRC, it does not automatically mean you are liable to pay tax.
To be liable for tax on items or services you sell online, you must either be trading or making a capital gain. This implies that individuals selling personal belongings from their homes, such as items from a loft or garage, are unlikely to be required to pay tax.
However, if you purchase or create goods with the intention of selling them for profit, you are likely considered as trading and thus, obligated to pay tax on any profits earned. Even so, your total income from trading or offering services must exceed £1,000 before expenses within the tax year; otherwise, you are not required to pay any tax on the profits.
