You may have heard of the change in rules for people selling items on digital platforms such as Vinted, eBay or Depop. If you sell more than a certain amount then you will need to report your earnings to HMRC and pay tax.
There isn’t actually a change in the rules; it’s just a crackdown on those who should have already been paying tax. The platforms (such as Vinted) are being told they need to share their information with HMRC. Platforms have to comply by January 2025 but they can share this information from now on. The rules apply to accounts that sell more than 30 items a year or who earn more than 2,000 euros (approximately £1,700).
If you’re just selling your own possessions after a de-cluttering session then it is unlikely that you will need to declare your earnings and pay tax. However - if you are buying things to resell with a profit then you will likely be classed as “trading” and may owe tax.
You will have to inform HMRC if you sell more than the Trading Allowance (£1,000) or sell a personal item for £6,000 or more (as this may be subject to Capital Gains Tax).
Everyone is entitled to a £1,000 tax-free allowance for ‘trading income’. Therefore if your trading income is below this threshold you won’t need to tell HMRC. It’s a good idea to keep a note of how much you’re earning.
If you go above the £1,00o limit then you will need to register with HMRC and submit a self-assessment tax return. However - you will only need to pay tax if your earnings are above £12,570 (the current personal tax allowance threshold).
Some people may also earn money from property platforms such as Air BNB. If this is the case you are entitled to another, additional, £1,000 allowance for property income.
If you feel that you may earn above the £1,000 limit (for either property or trading income) then you need to register with HMRC for self-assessment. You would need to register by 5 October after the end of the tax year in which you started earning self-employed income. The deadline for filing a return is 31 January.
Please get in touch if you would like more information on this. We are also able to assist with registering individuals for self-assessment with HMRC, as well as completing returns on your behalf.
Email us on katie@bluearrowaccounting.co.uk or call 07586163344.
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