HMRC debunks Income Tax fantasy for anybody promoting gadgets on eBay or Etsy
HM Revenue and Customs (HMRC) has issued a stark warning to those harbouring misconceptions about selling items online. The government body pointed out that there’s a common misunderstanding that individual sellers will be taxed on any item they flog.
However, it clarified that folks who peddle their wares on digital platforms like Etsy or eBay might find their details gathered and forwarded to HMRC by the platform itself. This is due to the UK’s participation in the Organisation for Economic Development (OECD) Model Reporting Rules for Digital Platforms.
These rules define a seller as anyone registered on a digital platform with the intent to sell goods or services, even if they’re not directly hawking the goods or services themselves. Even if this applies to you, HMRC reassured that it’s “unlikely” you’d be slapped with income tax for selling goods online.
In a post on X, it stated: “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 declaring: “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 doesn’t automatically mean you’re liable to pay tax.
To be required to pay 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, probably won’t need to pay tax.
However, if you purchase or create goods with the intention of selling them for profit, then you are likely considered as trading and thus must pay tax on any profits made. Even so, your total income from trading or offering services must exceed £1,000 before expenses within the tax year, otherwise, you won’t need to pay any tax on the profits.
