For many of us, selling second-hand ‘treasures’ on eBay is a side gig to our full-time employment. For others, it is your main source of income. The idea of ‘eBay tax’ isn’t necessarily one of our considerations before we list our clothes, bric-a-brac, furniture, antiques or anything else that we might be selling. But, as with many other things in this life, your eBay profits are not always totally free.
Ok, eBay tax isn’t a thing in the eyes of HMRC. That said, the tax implications of selling on eBay are very much real. The more you sell, the more it will appear to HMRC that you are doing so to make a profit. And if profits are the goal, this needs to be declared.
Profits are more clear cut when you either make or buy goods specifically to sell on eBay, but you should be mindful of your liability even if you’re selling second-hand tat.
The big question is, once declared, what tax do you owe on these profits?
The tax that you owe on eBay profits depends on how much profit you make. If you make up to £1,000 a year from your eBay sales – assuming that they don’t account for your full-time income – this is completely tax-free with the Trading Allowance. The Trading Allowance enables you to earn self-employment profits tax-free, not to be confused with the Personal Allowance which is the tax-free portion of your full-time earnings. The Personal Allowance currently sits at £12,570 for the 2023/24 tax year.
Please fill out all the required information to calculate how much you owe on your earnings
Even if you don’t earn more than £1,000 a year from your eBay sales, it might be worthwhile completing a Self Assessment just so that you’ve declared all of your earnings to HMRC. Take a look at the reasons that you might have to fill out a personal tax return here.
If you’re wondering how much Income Tax you’ll pay based on your total earnings and how it all works, here you go👇
If you’re lucky enough to be selling second-hand personal items of significant worth on eBay, you should be aware of your liability to pay CGT. Any personal possessions that you sell (with the exception of your car – check HMRC for more details on this process) that are worth more than £6,000, you’ll need to pay Capital Gains Tax.
The good news is that if you do sell something worth more than £6,000 such as jewellery or a painting, you only pay CGT on the profit i.e. anything over £6,000.
As an eBay seller, there are a few things you can expense as part of your business operations. For example, you can include your eBay selling fees as a business expense in your Self Assessment tax return.
Other things you can also consider expensing include PayPal fees, postage fees, courier costs, and packing supplies like parcel tape and boxes.
The important factor here is whether or not HMRC considers you to be ‘trading’. If you sell low-value items very occasionally, you’ll be ok not to declare your earnings. But as you start to approach the £1,000 tax-free threshold, you should consider filling out a Self Assessment to pay your taxes.
We firstly don’t ever recommend attempting to evade the tax man – but it’s also important to remember that when it comes to eBay, your transactions are online which means that they are completely trackable. HMRC could access your records via eBay itself, the credit/debit card company you’re with or by any other method in their arsenal.
It’s in your interest to keep your earnings in order, should they ever come knocking.
VAT stands for Value Added Tax (VAT) and is a tax added on most goods and services in the UK. It’s currently taxed at 20%.
You have to register for VAT if you:
You won’t need to register unless you earn over £85,000 in a year. Therefore, if you’re a self-employed eBay seller earning less than £85,000 a year, you don’t need to register.
Fun fact: In America, instead of VAT, consumers pay something called a sales tax. The actual amount you’re taxed varies depending on what state you’re in.
Manage your self-employed finances in one place with 10/10 bookkeeping tools.