Have you ever had a clear-out and wondered whether to sell your unwanted possessions online rather than throwing them away? Whether clothes you never wear, furniture that no longer fits, or tech you have upgraded from, selling online is a great way to make some extra cash; however, the question is whether you have to pay tax on such sales. Let’s take a look.
Selling personal items
If you are simply getting rid of old, secondhand items you originally bought for personal use, you won’t have to pay tax. This means selling your old phone, a sofa, or clothes on eBay or Facebook Marketplace won’t land you in trouble with HMRC. Think of it like a car boot sale, but online.
What if you’re making a business out of it?
This is where things change. If you regularly buy items to resell at a profit, HMRC can see this as trading rather than just having a clear-out. This means you could be liable for tax on your earnings.
Signs that HMRC might class you as a business include:
Selling brand-new or bulk-bought items. Making goods yourself to sell. Regularly selling with the intention of making a profit.
If any of these sound like you, it is worth getting expert advice from business accountants Cardiff, such as https://www.hazlewoods.co.uk/expertise/business-accountants/cardiff, to avoid any tax surprises.
What about the £1,000 trading allowance?
If your total sales from online selling stay under £1,000 per tax year, you won’t need to register as self-employed or pay tax; however, if you make over £1,000, you may need to:
Register with HMRC as self-employed. File a tax return. Pay tax on your earnings.
Final thoughts
If you are selling the odd item online, you don’t have to worry; however, running a mini business can be a different story. If you are unsure where you stand, business accountants in Cardiff can help make sense of it all; in this way, you can sell with confidence without stressing over HMRC knocking on your door.