eBay and tax

Reviewed by Mike Parkes, technical director, GoSimpleTax

Person holding a pen with 'start selling online' written in the middle of a notebook

Most of us have personally bought or sold an item via eBay at some point. It has become the online equivalent of selling items you no longer want or need at a car boot sale. It is possible to make quite a bit of money selling your old stuff. But where do HM Revenue and Customs draw the line?

I've sold stuff on eBay. Do I have to pay tax?

If you’re doing a clearout of clutter at home, no. Even if your clutter sells for quite a lot - as far as HMRC is concerned, you only have to pay tax on what you buy to sell on for a profit, make to sell, or sell for other people.

Anything you sell that is yours - for instance, you have already used it or bought it by accident - is not taxable. Neither do you need to set up as a business.

But the moment you buy, make or take anything with the intention of selling it on you are a business and must register with HMRC as a business, whether you choose to be self-employed or even a limited company. You can of course be both a private and business seller, in which case you should use different eBay and bank accounts to keep them separate.

Since April 2017, you can earn up to £1,000 from 'occasional jobs' selling goods and services you provide yourself without having to pay tax on that income.

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What about VAT?

VAT registration is compulsory for all types of business once you reach the VAT threshold or expect to exceed the VAT taxable turnover of £85,000 in any 12 month period since 1 April 2017.

You need to think about VAT registration if your eBay business turnover, including postage costs to customers, looks as if it might exceed the VAT registration threshold over the year.

There are additional VAT registration requirements by law if you are involved in importing or exporting. VAT registration may be required in other countries depending on the value and type of goods you sell or acquire from other EU countries or if you 'distance sell' from another EU country to non-VAT registered customers in the UK.

Read official advice on working for yourself on the HMRC pages of the GOV.UK website.

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