Tax Guidance For eBay

Many of us use eBay to get rid of anything cluttering up the garage or attic, hoping those old relics we’ve harboured for years are finally worth a tidy profit. It’s relatively easy to fall into…

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Last Updated: 5th December 2023

Many of us use eBay to get rid of anything cluttering up the garage or attic, hoping those old relics we’ve harboured for years are finally worth a tidy profit.

It’s relatively easy to fall into the world of e-commerce to the point where you become a professional seller. And it’s perfectly fine to try your hand at online trading from the comfort of your home… provided you tell the taxman. You’ll also need to give him his share when you start earning decent money.

Allow us to explain…

Do I need to pay tax on my eBay earnings?

If you’re selling goods via eBay on a regular basis to make a profit and/or are buying stock in bulk, there’s a good chance that HMRC will consider your motivation to be profit-driven.

You will have to pay tax on your eBay earnings if you’re clearly selling items for the purposes of making a profit.

How much tax do I need to pay?

It all depends on how much profit you make. eBay sales should be listed right alongside all your other earnings for the year in your Self Assessment tax return, and tax is subsequently taken from your overall income (20%, 40% or 45%, depending on your tax bracket).

The good news is that there is some tax relief. HMRC have set up a Trading Allowance which entitles you to earn up to £1,000 in online sales completely tax-free without even having to inform HMRC.

So, if you’re raking in a little less than a grand on a yearly basis from eBay, you don’t technically have to complete a Self Assessment. However, we’d strongly advise you to do so anyway. Recording less than £1,000 worth of income will be fairly straightforward, and it never hurts to have a paper trail for tax purposes.

Capital Gains Tax

If you’re selling any personal items (except your car) worth more than £6,000, then you will need to pay Capital Gains Tax. In this instance, it’s the gain (profit) that’s taxed, not the total amount of money received. For a list of included personal possessions, take a look at the government’s website.

On the positive side, the taxman only charges Capital Gains Tax on overall gains above £11,300. So, if you bought an item for £3,000, you could sell it for up to £14,300 without having to pay Capital Gains Tax.

Use GoSimpleTax to record your eBay income

If your eBay earnings are such that you’re essentially trading as a business, then you need to start thinking about the Self Assessment tax return deadline. HMRC will expect you to record and submit your income by 31 January every year – and failure to do so could lead to fines.

It’s time to get your affairs in order and turn to GoSimpleTax. Our modern, high-quality tax software gives you full control of your tax and helps you understand your obligations – offering guidance and support on what you owe and what you’re owed.

Download our free trial today to sample our tax software and keep your eBay account ticking over without ticking off the taxman.

Last updated on 8th October 2018.

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Blog content is for information purposes and over time may become outdated, although we do strive to keep it current. It's written to help you understand your Tax's and is not to be relied upon as professional accounting, tax and legal advice due to differences in everyone's circumstances. For additional help please contact our support team or HMRC.

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