According to recent reports in the popular media, if you sell goods online new rules mean HMRC can tax you on the money you receive.  Is this correct? What are the rules for online sellers?

New rules

It’s true to say that new tax rules have applied to online sales since 1 January 2024, but these have no impact on your tax liability regardless of whether you’re a frequent or occasional seller.  Many of the reports are factually incorrect and simply scaremongering just to generate a headline. Contrary to what many of the reports say, there are no new rules that affect whether proceeds on eBay etc. are taxable. The new rules will merely require selling platforms to provide HMRC with details of those online sellers who use them to sell.

The facts

The new rules affect online platforms such as eBay, Amazon Marketplace and Etsy but not those who use them for buying or selling.  Since 1 January 2024 such sites are required to send reports of those online sellers who sell through them to HMRC.  This is bound to flush out people who ought to have reported their activity to HMRC, and so will catch out anyone trying to evade tax or those who didn’t realise they had to notify.

Although the new reporting rules have applied since 1 January 2024, the first reports from eBay and the like won’t be due to HMRC for another year.

The basic rules are that you aren’t liable to income tax on sales of items you bought for personal use or received as a gift, even if you make a profit.  If you acquire items with the intention to selling them, any profit you make taxable and any loss you make is tax deductable.  But if your total sales proceeds are £1,000 or less in a tax year the profits and losses are income tax exempt.

Beware

If you sell an item other than machinery that has an expected lifespan of 50 years or more, e.g. a painting, any profit you make is chargeable to capital gains tax (CGT), but exemptions can apply.

Online sellers act now

If you sell online, now is the time to check if you need to declare the income to HMRC before the new reporting rules kick in.

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