Lots of people earn on the side by selling on eBay, Vinted or Etsy, doing freelance jobs, or renting out a room or a driveway. Whether you owe tax depends on how you earn the money, not just how much. This guide is general information. Check GOV.UK or ask an accountant about your own case.
Trading or just selling your own things?
Selling your own belongings, such as clothes you have worn or furniture you no longer need, is usually not trading, and normally does not create an income tax bill. Buying items to resell, making goods to sell, or offering a service on a regular basis is trading. HMRC looks at how often you do it, whether you set out to make a profit, and how organised the activity is.
The £1,000 trading allowance
If your gross trading income (before costs) is £1,000 or less in a tax year, you generally do not need to tell HMRC or pay tax on it. If it is more than £1,000, you can either:
- deduct the £1,000 allowance from your income instead of your actual costs, or
- deduct your real allowable expenses (you cannot do both).
There is a similar £1,000 property allowance for small amounts of property income, and the Rent a Room scheme for letting furnished space in your own home. Rules and limits change, so check GOV.UK.
When you need to register for Self Assessment
If your gross trading income is above £1,000, you normally need to register for Self Assessment and file a return. Register by 5 October after the end of the tax year in which the income started. Your tax return is then due by 31 January. See our complete Self Assessment guide.
Online platforms share your details
Platforms such as online marketplaces and gig apps now report sellers’ details and earnings to HMRC. That means HMRC can already see income you have not declared. Declaring it yourself, with the costs against it, is far better.
What to keep
- A record of every sale: date, amount, platform and customer.
- Receipts for what you bought to resell, materials, packaging and postage.
- Platform fees, listing fees and payment-processing charges.
- Bank statements that show the payouts.
A simple example
Sam sells handmade candles on Etsy and takes £4,200 in a year. Materials, packaging and fees come to £1,900. Sam can deduct either the £1,000 allowance (profit £3,200) or the real costs (profit £2,300). The real costs give the lower profit, so Sam deducts those. A profit of £2,300 is below the personal allowance, but Sam still needs to register and file because gross income is above £1,000.
VAT
You only need to register for VAT when your taxable turnover goes above the VAT threshold (£90,000 at the time of writing). See our VAT registration guide.
How AvrioBooks helps
Record each sale and cost, attach receipts and import your bank statement to match your payouts. Your profit and loss shows what you really made after costs. See accounting software for online sellers.
Frequently asked questions
Do I pay tax on selling things on Vinted or eBay?
Selling your own unwanted belongings is usually not taxable. Buying to resell or making things to sell is trading and can be taxable.
What is the £1,000 trading allowance?
If your gross trading income is £1,000 or less in a tax year, you generally do not need to declare it. Above that, you can deduct the allowance or your real expenses, but not both.
When do I need to register for Self Assessment?
If your gross trading income is above £1,000, register by 5 October after the end of the tax year in which the income started.
Does HMRC know about my online sales?
Online platforms now report sellers’ details and earnings to HMRC, so declare your income and claim your costs.
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