There’s nothing more satisfying than clearing out your wardrobe – and while you may not want your old stuff anymore, some things can be too good to throw away. So, you snap a pic of them and post it to an online marketplace – and voila, you’ve made some extra cash.

If you’re a regular seller, you’ll know how easy it is to pop something on the likes of Vinted or Depop, make a sale, and have the money in your bank account within days. But due to the new reporting rules, will HMRC now see your decluttering as a ‘side hustle’?

The good news is that if you only put the occasional jumper or unused gift up for sale from time to time, the answer is that it’s unlikely.

Let’s discuss what the new reporting rules mean for selling your clothes and unwanted items online.

In a nutshell, starting from January 1st, 2024, online marketplaces such as Etsy, eBay and Vinted will be responsible for collecting data on how much their sellers earn. This doesn’t just apply to online marketplaces selling physical goods though, and also includes digital platforms such as Uber and Airbnb.

HMRC have always been able to request this information, but it’s now a legal requirement for digital platforms to collect this data along with information which will help them identify your tax records. The platforms you use to sell through will then automatically report the collected data to HMRC, starting from January 2025.
 

For you to pay tax on any goods or services you sell online, you either need to be trading or making a capital gain. If you occasionally sell items which you’ve had lying around your home – for example, a toolbox from your garage or a jumper that doesn’t fit anymore – it’s unlikely you’ll need to pay tax because you’ll be classed as an ‘occasional’ seller.

What is an occasional seller?

To be classed as an occasional seller you need to:

• Have fewer than 30 sales
• Receive no more than €2,000 (which is just over £1,700)

Who is classed as an online trader?

Unfortunately, there’s no clear definition of what a ‘trader’ is, but there are ways to determine whether your activity is classed as trading. The two important things to look at are whether you intend to make a profit, as well as the number of transactions.

If you make regular income from selling on online platforms, to the point where you consider it a ‘side hustle’, you’re most likely trading. Fortunately, you won’t need to register with HMRC or start sending tax returns if the total amount you make in a tax year is below the £1,000 trading allowance.

It depends on what you’re selling. Capital Gains Tax is a tax on any profit you make when you sell something that’s increased in value. You’ll only be taxed on the ‘gain’ and not the full amount you’ve received.

Some assets are tax-free, so you won’t normally pay Capital Gains Tax on personal possessions worth less than £6,000 apart from your car. Your main home is also exempt.

You’re also exempt from paying Capital Gains tax if the total gains you make in a year are below the CGT tax-free allowance. The allowance for 2024/25 is different to the amount available in 2023/24.

If you make more than 30 transactions in one year, HMRC will be notified that you’re potentially acting as a trader – although it’s currently unclear whether those rules are for one platform or a total across all digital platforms.

Although HMRC will be notified, this doesn’t automatically mean you need to register for Self Assessment. For example, if you sell 40 pairs of old jeans then HMRC will be told that you’ve made more than 30 transactions.

But, if you sell them for £5 each (making £200), you’ll be below the trading allowance, and won’t need to register for Self Assessment or start sending tax returns. So you won’t be classed as an online trader.

It’s important to remember the rules surrounding tax and selling online haven’t changed, it’s just digital platforms now need to report on sellers who meet a certain criteria. If you occasionally sell some bits here and there or have an online business or hobby that earns under the trading allowance, you can continue as normal. Just ensure you keep note of your earnings, in case HMRC do get in touch!
 
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