eBay, Depop and Vinted sellers issued tax warning forward of Friday deadline
Selling second-hand clothes on platforms like eBay, Depop and Vinted could see the taxman take an interest
Selling pre-loved clothes on platforms like eBay or Vinted has become an easy way for many to clear out their closets and pocket some extra cash. However, sellers should be aware that this additional income could trigger the interest of the taxman.
Since January of 2024, online selling platforms have been gathering data about our sales and the extra income we’re generating. From Etsy to Deliveroo, these platforms are now sharing information with HMRC that could result in a hefty tax bill.
The warning comes as the deadline looms for self-assessment tax returns. Anyone who needs to fill in a tax return this year, whether it’s from freelance work or selling online, only has until Friday, January 31 to do it online. Late tax returns can lead to a fine.
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But there’s no need to hit the panic button just yet – not everyone will be impacted. While digital platforms are keeping tabs on your sales, it’s actually your profits that HMRC is keen on.
Many people who sell on sites like Vinted often offload brand new clothes at a loss. For instance, if you purchased a new pair of jeans for £50 and then decided to sell them for £5, technically you would be making a loss that isn’t taxable.
However, if you’ve been snapping up cheap clothes or second-hand items and selling them for a higher price, then you might find yourself needing to pay tax. Sales information will only be passed on from larger sellers, with HMRC getting your details if you sold more than 30 items in a year to earn £1,700.
So, if you’re running a successful side hustle, how much tax will you be hit with? It’s vital to understand the trading allowance and its implications. This tax exemption allows you to earn up to £1000 from self-employment without having to report it to HMRC.
This could be from casual work, a side gig, or selling clothes online. For your first £1,000, there’s no need to worry. But, once you go over this limit, you’ll have to fill out a self-assessment tax form which will take into account your relevant expenses and calculate how much tax you owe.
To demonstrate how this works, let’s use Tom as an example. Tom is a teacher who, between April 6, 2023, and April 5, 2024, does some part-time photography and earns £800. He also sells some old clothes on Vinted, making an extra £400.
Since Tom didn’t plan to make a profit when he bought the clothes, and they’ve lost value since then, the £400 doesn’t count towards his £1,000 trading allowance. Therefore, only the initial £800 is considered, which is under the threshold, meaning he doesn’t need to file a self-assessment tax return.