HMRC has provided clarity on the tax regulations related to selling goods online. This guidance followed an inquiry from a seller on eBay who was surprised to be asked for tax information while selling personal items on the platform.
The seller questioned the necessity of providing their National Insurance number when selling personal belongings on eBay, particularly in light of the £1,700 tax-free allowance. They sought clarification on whether this allowance includes their primary income from employment, given that their eBay sales would not come close to reaching this threshold.
As of the beginning of 2024, new regulations mandate that digital platforms like eBay must share sales data and certain seller details with HMRC. This requirement applies to individuals who sell 30 or more items in a calendar year and generate around £1,700 in sales. Digital platforms encompass various software interfaces, including mobile apps and websites, where goods and services are offered to users.
HMRC is obligated to request specific details from sellers falling under these regulations. In response to the eBay seller, HMRC initially directed them to a Government webpage outlining when additional income outside of employment must be reported to HMRC. This page includes a tool to assess the necessity of reporting extra earnings, with the seller indicating that, based on the tool’s results, they may not need to disclose this income to HMRC. However, the seller expressed concerns about potentially entering a higher tax bracket if they provide their National Insurance number on eBay as requested.
In addressing this concern, HMRC clarified that personal possessions sold for less than £6,000 are exempt from taxation. If an item is sold for more than £6,000, capital gains tax may apply at a rate of 24 percent. Government guidance specifies that personal possessions refer to items used for personal use, including self-purchased or gifted items like clothing, jewelry, computers, and mobile phones.