Should you pay tax on selling goods online?

Posted on 6th February 2024 by Streets -  Income Tax


Image to represent Should you pay tax on selling goods online?

HMRC has published new guidance for taxpayers that regularly sell goods or services through an online marketplace. The guidance makes it clear that this activity could be treated as a ‘trade’ for UK tax purposes. If this is the case taxpayers may need to pay tax on income they earn from buying and selling goods as a trade or business using online marketplaces such as eBay. 

If taxpayers are just selling unwanted items that have been laying around their home, such as the contents of a loft or garage, it is unlikely that they will have to pay tax. However, if they buy goods for resale, or make goods with the intention of selling them for a profit, then they are likely to be trading and will have to pay tax on their profits.

There is also a £1,000 tax allowance for miscellaneous trading income. This is known as the Trading and Miscellaneous Income Allowance. Where this £1,000 allowance covers all the individual’s relevant income (before expenses) the income is tax-free and does not have to be declared to HMRC. 

Traders should note that since 1 January 2024, digital platforms are required to collect and report seller information and income to HMRC. These digital platforms must report sellers’ income by January 2025. The changes are an internationally agreed set of rules requiring digital platforms to report certain information to HMRC.

If you have trading income from online sales and are unsure what, if anything, you need to declare, please call so we can help you consider your options.


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The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


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