Trading vs Selling Personal Items
The key question is whether you’re trading or simply clearing out possessions:[1]
- Clearing out — selling your old clothes, books, and gadgets is generally not taxable
- Trading — buying items to resell, making items to sell, or running a regular selling business is taxable
HMRC looks at factors like frequency, volume, and whether you’re buying stock specifically to resell.
The £1,000 Trading Allowance
If your gross trading income is £1,000 or less per year, it’s tax-free under the trading allowance. You don’t need to register or report it.[1]
Above £1,000, you must register for Self Assessment and either:
- Deduct the £1,000 trading allowance instead of actual expenses, or
- Deduct your actual business expenses
Platform Reporting Rules
From January 2024, digital platforms like eBay, Etsy, Amazon, and Vinted are required to report seller information to HMRC if you make over 30 sales or earn over €2,000 in a year.[3]
Important: This reporting doesn’t mean you owe tax. It just means HMRC can see your sales data. Whether you owe tax depends on whether you’re trading and your income level.
Common Expenses You Can Deduct
If you’re trading and choosing actual expenses over the trading allowance:[2]
- Cost of stock/materials
- Platform fees and selling commissions
- PayPal/payment processing fees
- Postage and packaging
- Equipment (scales, printer, camera)
- Working-from-home costs (proportion)
Do You Need to Register for VAT?
Only if your taxable turnover exceeds £90,000 in a 12-month period. Most casual sellers are well below this threshold.
Record Keeping
Keep records of all sales (screenshots of listings, PayPal transaction records, invoices) and expenses (receipts for stock, postage records). Platforms usually provide downloadable sales reports.[4] Good records also make it easier to file your tax return online at year-end.
Frequently Asked Questions
Do I have to pay tax on eBay or Etsy sales?
It depends on whether you are trading or simply selling personal possessions. Clearing out old belongings is generally not taxable. However, if you buy items to resell or make items to sell regularly, that is trading and is taxable once your income exceeds £1,000.
What is the £1,000 trading allowance for online sellers?
If your gross trading income from online selling is £1,000 or less per year, it is tax-free under the trading allowance and you do not need to register with HMRC or report it.
Does eBay report my sales to HMRC?
Yes. From 2024, platforms like eBay, Etsy, Amazon, and Vinted must report seller information to HMRC if you make over 30 sales or earn over €2,000 in a year. However, being reported does not automatically mean you owe tax.
What expenses can I deduct as an online seller?
If you choose actual expenses over the trading allowance, you can deduct the cost of stock, platform selling fees, PayPal or payment processing fees, postage and packaging, equipment, and a proportion of working-from-home costs.
Further Reading
- Side Hustles & Tax
- Trading & Property Allowances
- Digital Platform Reporting Rules
- Registering as Self-Employed
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Sources
- Tax-free allowances on property and trading income — GOV.UK
- Working for yourself — GOV.UK
- Reporting rules for digital platforms — GOV.UK
- Self Assessment tax returns — GOV.UK