Income Tax and selling online

In recent weeks there has been a flurry of online activity discussing the new law that will require online marketplaces to report to provide their users’ income information to HMRC. Many users of these platforms, such as eBay and Vinted have been concerned that they’ll no longer be able to use the platforms to sell old clothes or similar. 

The key point to remember is that the rules for declaring income and paying tax on income from selling online have not changed. 

HMRC already had the power to request information from online marketplaces. The difference with the new rules is that the digital platforms now have to provide the information to HMRC automatically. 

The defining factor with paying tax on this income is largely intent. If you dispose of your old clothes or other household items by selling online, it’s unlikely that this will constitute a taxable transaction. If you undertake a commercial venture with a view to making a profit (e.g. buying stock to resell at a profit), this is likely to be considered trading and tax liabilities may arise.

Furthermore, if you are carrying on a trade, there is a £1,000 Trading Allowance which means sales income up to this level can be disregarded for income tax purposes.

If you think you may be liable to tax on trading income, or are in any way unsure of the implications of the tax rules on any income stream you may have, please speak to us.