Income Tax and selling online
In recent weeks there has been a flurry of online activity discussing the new law that will require online marketplaces to report information about income made by their users to HMRC. The discussion has led to many people asking questions such as “Will I have to pay tax on the money I make from selling my old belongings on Vinted or eBay?”
The key point to remember is that the rules for declaring income and paying tax on it have not changed. HMRC had the power to request information from online marketplaces anyway; from 1 January 2024 the new rules will mandate digital platforms to give the information to HMRC automatically.
If you sell your old clothes or other household items online, it’s unlikely that this will constitute a taxable transaction, but if you undertake a commercial venture with a view to making a profit (e.g. buying stock to resell at a profit), this is likely to be considered trading and tax liabilities may arise.
Furthermore, if you are carrying on a trade, there is a £1,000 Trading Allowance which means sales income up to this level can be disregarded for income tax purposes.
The government has published a technical consultation on its new Founders’ Relief. The consultation itself provides an overview of the proposed qualifying conditions for it, including individual and company requirements and what must be satisfied. HMRC’s own figures, however, show that the strict conditions mean only about 600 individuals will be eligible to apply each year.
It’s bad news for mortgage holders and borrowers as the Bank of England (BoE) raises interest rates by a quarter point to 4% for the first time since August 2023.
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