As of January 1st 2024, online platforms such as eBay are required to share information about your sales with relevant tax authorities. This change was mentioned in the Downsizing Your Hardware 2024 thread but I felt it merited its own topic as it’s something I’ve been looking into this year and I figure some people here might be caught unawares. The short of it is that if you have sold anything on eBay or elsewhere, you might need to declare your sales for tax purposes depending on what you sold and your local tax rules.
This is an international initiative and affects sellers in many countries but I’m based in the UK so that’s what I’ll be talking about in this post. Perhaps sellers from elsewhere could chime in with information pertaining to their area?
My intention is for this topic to be a practical source of information as there are many online sellers here - and not a political discussion on whether this is a good idea or the philosophical merits of taxation - so please bear that in mind in your replies.
So, for UK sellers, what’s changing?
Some business operate via online sales platforms without declaring their income and thereby evade tax. It used to be the case that HMRC would have to request information on specific sellers from websites like eBay in order to investigate this matter, but now platforms are required to automatically share information about you as a seller if you’re selling 30 or more items a year OR have total earnings over the equivalent of €2,000 (currently around £1,700). If either of those criteria are met, eBay etc… will tell HMRC about your earnings, which could of course encompass anyone who’s sold a couple of expensive synths or people who regularly sell off old equipment.
What does this mean for YOU? Well the first thing you might like to try is HMRC’s online checker. Check if you need to tell HMRC about additional income - GOV.UK
As an example, here’s how it went for me. I sold a few thousand pounds of used gear on eBay in each of the tax years 2022/23 and 2023/24, so I’ll start by selecting “Sold goods or services.”
Everything I sold was a personal possession.
None of the items I sold were individually worth more than £6000.
You do not need to pay tax on personal possessions you sold for less than £6,000.
BUT whether or not you were selling “personal possessions” or whether you were trading (selling items for a profit) is crucial. HMRC has some guidance on this matter with examples. Selling online and paying taxes - information sheet - GOV.UK
I was a little concerned as to whether I had interpreted this correctly so I decided to book a consultation with a Chartered Accountant to get a professional opinion on whether I needed to file a personal tax return for the year 2022/23. In my case, it’s pretty easy to show that I purchased all of my equipment for my own personal use, and comparing the original invoices to my eBay sales, every item clearly sold for a loss as part of a general clear out. My accountant has advised me that I do not need to declare my eBay activity, and that if HMRC contacts me in due course, my documentation and relatively low volume of sales makes it clear that I was selling personal possessions and that this will be sufficient for them to cancel their request to file a return.
THIS MIGHT NOT BE THE SAME FOR YOU. Do you have a very high volume of sales? Have your sales made a profit? Some non-exhaustive examples I can think of that could affect sellers who post here:
- if you bought a run down bit of gear, repaired/refurbished it, and sold it for a profit, that would likely be seen as trading rather than selling a personal possession
- similarly, if you bought a lot of one particular piece of equipment, modded it, and then sold those modded units for a profit, that would likely be seen as trading also
- if you sold a synth for more than £6000 you may need to pay capital gains
I have done my best to relay my understanding as clearly as possible but I am not a qualified accountant. If you have any doubts, it might be worth booking an appointment with a Chartered Accountant for yourself to discuss your eBay/Reverb/etc… sales with someone who understands how the rules should be interpreted. You might also want to make sure you have any relevant documentation such that if HMRC does contact you, you can show that you did not need to declare your sales.
- I think this just might mean that I will buy less stuff so I don’t have to sell stuff anymore - or just move stuff on using this forum for a good price to decent people - I do wonder though if this is going to drive the prices of things up as people will have to start accounting for the tax they will have to pay for selling.
