You might be planning on selling online and wondering if or when you’ll need to let HMRC know about it for tax purposes. As with most things tax-related, there isn’t one straightforward answer.
It really depends on what you’re selling, how regularly and how much you’re earning from it. It even depends on what your intentions are! For example, are you planning to make a profit, or are you just trying to declutter your wardrobe?
From selling the odd jumper that doesn’t fit you anymore, to running a business selling goods online, a whole spectrum of different scenarios might apply. Your unique circumstances will dictate whether you need to register with HMRC to pay tax.
We’ll go over the various rules and regulations around online selling so you can work out which compliance boxes to tick off.
What are the tax reporting rules if I sell on online marketplaces?
Due to the rising number of people using online marketplaces like Vinted, Depop, eBay, Etsy, etc. to sell online, new rules have been devised to help HMRC keep track of taxes and earnings.
As of 1st January 2025, online marketplaces will be legally obligated to tell HMRC about what you earn from selling through their platforms if you’re classed as an online trader.
HMRC have long been able to request this information, but the new rules mean this process will become more automated. It’s important to note that these regulations also apply to the sale of services online through platforms like Uber and Airbnb, not just the sale of physical items.
Am I classed as an online trader?
Online trading generally applies to those who sell with the intention of making a profit through selling things online.
This also includes those who buy items with the specific intention of reselling them on platforms like Vinted, Depop, eBay and Etsy at a higher price. In HMRC terms you’re classed as an online seller if you:
- Make more than 30 sales
- Receive more than €2,000 (equal to around £1,700)
Important point to remember
Meeting the criteria on a marketplace simply means you’re considered an online seller based on the sales you make through that platform. This means the marketplace will automatically report your earnings from that platform to HMRC.
It doesn’t necessarily mean you’ll need to pay tax on them. Likewise, being under the criteria doesn’t mean you won’t have to pay tax on your earnings! We’ll explain this next.
Do I need to register with HMRC as an online seller and pay tax?
You will need to register with HMRC and report the income you receive from online selling if you’re an online trader and make more than the £1,000 trading allowance from self-employed or miscellaneous activities.
This means you can earn up to the sum of £1,000 from self-employment or miscellaneous trading each tax year without telling HMRC or paying tax on those earnings.
You can benefit from this allowance even if you earn money from other sources, such as employment. You could earn wages from a part-time job, for instance, and still use the trading allowance against the income you generate from a self-employment side hustle selling things online.
So, if you make 35 online sales, you might not necessarily need to pay tax on anything if the total amount you receive from them is less than £1,000.
Our blog goes into more detail about who needs to register for Self Assessment and what happens next if you!
Whatever your circumstances, you must make sure you’re doing everything by the book. Even if it’s just an honest mistake, missing deadlines or holding information back from HMRC can lead to serious trouble and hefty fines!
Understanding the rules and regulations around when to tell HMRC if you’re selling things online can be complicated. Check out our accounting support hub for more help, or to ask a tax question.
