August 15, 2025
By Merranti

Selling on eBay or Vinted? Here’s When You Might Need to Tell HMRC

Once upon a time, people cleared out their homes and sold unwanted items at a local car boot sale. Fast forward to today, and apps like eBay, Vinted, Depop, Etsy, and Gumtree have become the modern version of the car boot — just with a global audience and no muddy field in sight.

But as these platforms grow in popularity, so does HMRC’s interest in the income some sellers are making. With new reporting rules in force and HMRC now sending “nudge” letters to certain online sellers, it’s important to understand when casual selling turns into taxable income — and what you should do if contacted.

In this article, we cover:

When selling online becomes taxable
The new reporting rules for platforms
What counts as trading
The £1,000 trading allowance
And what to do if you receive a letter from HMRC

Not All Online Selling Is Taxable

First things first — just because you sell something online doesn’t mean you owe tax.

If you’re selling personal items you previously bought or received for your own use — like old clothes, furniture, or gadgets — this is normally not taxable. HMRC classifies this as the disposal of personal possessions, and any income received is not considered trading or subject to income tax.

However, if you regularly buy items to resell at a profit, or make things to sell, you may be seen as operating a trading activity — and that could have tax consequences.

New HMRC Rules for Online Platforms

From 1 January 2024, new rules require digital platforms to report seller activity to HMRC.

Under SI 2023/817, platforms like eBay, Etsy, and Vinted must submit details of sellers who meet the following criteria:

30 or more sales in a year, and
Earnings of at least €2,000 (around £1,700) in gross income

This applies to both goods and services. HMRC is now matching this data with taxpayer records and, as seen in early 2025, is contacting individuals where undeclared income is suspected — particularly for the 2022/23 tax year.

So, even if you haven’t received a letter yet, it’s a good time to review your activity and make sure you’re compliant.

When Does Selling Become a ‘Trade’?

The line between selling old items and running a business can be blurry, but HMRC uses several criteria to decide whether you’re “trading” — including:

Frequency: Are you making regular sales, not just one-off clear-outs?
Intention: Are you selling to make a profit?
Organisation: Do you have stock, packaging, branding, or a sales process?
Improvement: Are you improving or customising items before sale?
Time and effort: Are you treating it like a side hustle or business?

You don’t need to tick every box, but the more of these that apply, the more likely HMRC will treat you as trading — in which case, you may need to submit a tax return.

The £1,000 Trading Allowance

Even if HMRC considers you to be trading, that doesn’t automatically mean you owe tax.

If your gross income from trading or casual work is less than £1,000 in a tax year, the trading allowance applies — and you do not need to report or pay tax on it.

However, once you go over the £1,000 threshold, things change.

You must either:

Submit a self-assessment return, and
Choose to deduct the £1,000 trading allowance, or
Deduct actual business expenses, if they’re higher than £1,000

This is where many people fall foul. They may think a few hundred pounds of extra income isn’t a big deal, but if their total trading income exceeds £1,000, they could still be required to register for self-assessment, even if no tax is ultimately payable.

Example: Casual Seller vs Online Trader

Example 1: Non-Taxable
Jess sells a few second-hand dresses on Vinted that she no longer wears. She earns £300 in total over the year. These were personal items bought for her own use. She is not trading, so there’s no tax and no reporting required.

Example 2: Potentially Taxable
Sam buys second-hand trainers at car boots, restores them, and resells them on eBay. He makes 50 sales a year and earns £3,000. He is trading, so must register for self-assessment, but can deduct:

Actual expenses (e.g. cleaning products, eBay fees), or
The £1,000 trading allowance

However he may not owe any tax if he has no other income, or if expenses outweigh income — but he still needs to declare it.

What If You Receive a Letter From HMRC?

Early in 2025, HMRC began writing to online sellers who may have under-declared or failed to declare income from platforms. These are often called ‘nudge letters’, encouraging voluntary disclosure before further action is taken.

If you receive one:

Don’t ignore it — even if you believe you’ve done nothing wrong
Review your activity and records from the relevant tax year
Consider whether you were trading, and if so, whether income exceeded £1,000
Seek professional advice if you’re unsure

In many cases, even if income was above £1,000, no tax is due because of available expenses or unused personal allowances. But the obligation to report still exists.

You Might Be Self-Employed Without Realising

The threshold for being classed as self-employed is low — it can apply even to informal or small-scale activities.

HMRC states that if you earned over £1,000 from self-employment, you must register for self-assessment — even if you don’t owe tax.

Many sellers don’t realise this applies to them, especially if they treat online selling as a hobby or side income. But failing to declare it can lead to penalties, interest, and investigations.

What About Capital Gains Tax?

While most sales of personal belongings are income-tax free, there is a separate rule for valuable items.

If you sell a personal item (called a chattel) for more than £6,000, capital gains tax (CGT) may apply — especially if it’s a collection, antique, or artwork. However, CGT is beyond the scope of this article and applies much less frequently than income tax in this context.

Final Thoughts: Don’t Get Caught Out

With online platforms now reporting seller data directly to HMRC, casual sellers need to be more aware than ever of their tax position.

If you:

Sell occasionally for decluttering = usually fine
Sell frequently for profit = likely taxable
Earn over £1,000 = must consider reporting

At Merranti, we help clients understand whether their online activities count as a business and how to use allowances and personal reliefs to stay compliant — while avoiding overpaying tax.

Selling online this year? Let us help you check whether you’re a trader in HMRC’s eyes — before they decide for you.