There has been lots of confusion in recent weeks over whether people will need to pay tax when selling their old clothes and homeware online.
I take a closer look and clear up some misconceptions so you can continue to sell your old clutter without worrying about whether you need to pay tax.
Before we get started with this post, I would like to point out that I am not an accountant or legal adviser.
However, I have spent years writing about personal finance online and I am going to back up everything I write about with links from the HMRC website.
Further reading:
Is There A New Tax On Selling My Old Stuff?
No, there are no new taxes on selling your old stuff.
There is, however, quite a bit of confusion around taxes, trading allowances and what counts as being a trader.
This has not been helped by HMRC’s original messaging on the subject not being clear enough and the mainstream media posting lots of very misleading, clickbait articles.
So here’s what’s happening.
HMRC are trying to stop resellers from getting away with not paying any tax. To do this, they have asked apps such as Vinted and eBay to report anyone selling over thirty items per year or making more than £1700.
This is not a new tax, just a way of ensuring those who should be paying tax are doing so.
Do I Need To Pay Tax When Selling My Old Stuff?
No, you don’t need to pay tax when selling your old stuff at a loss or the price you paid for it. This includes books, clothing, CDs, DVDs and homeware.
Most people sell their stuff on apps such as Vinted and Depop and are simply making a few extra pounds to put towards new items and are selling at a fraction of what they originally paid.
Even selling the occasional brand-new item at close to the price you bought it for won’t be an issue.
The only time you might be taxed when selling your old stuff is if it’s worth over £6k when you may need to pay capital gains tax.
This is unlikely however to be the case for anyone selling their kid’s old clothes for a few pounds on Vinted.
You can read more on the HMRC website about Online Selling and Reselling which states:
‘If you are just selling some unwanted items that have been laying around your home, such as the contents of a loft or garage, it is unlikely that you will have to pay tax.’
What Is A Reseller?
A Reseller is someone who buys clothes, homeware or anything else cheaply and then sells on for a profit.
In this case, it is likely to be people buying desirable branded items cheaply from charity shops and then reselling them for a big profit.
How Will HMRC Know Who Is A Reseller and Who Isn’t?
Resellers are pretty easy to spot once you know what you’re looking for.
- Lots of items in a wide range of sizes and styles.
- Very few bundles of items.
- Selling lots of the same item over a short period eg, ten pairs of trainers in three months.
- Lots of brand new with tags items.
What Is The £1000 Trading Allowance?
The trading allowance is for those who make a small amount of money doing side hustles. Selling your old clothes and homeware items is not part of this allowance.
Examples of side hustles that would come under the trading allowance are dog walking, babysitting, blogging, freelance writing and even reselling the odd item.
As long as your profits are under £1000 then you won’t need to pay tax on them or even register as self-employed.
However, once your profits are over this amount, you will need to register and file a self-assessment tax return.
See this post on the HMRC website which has lots of examples selling and reselling that would count as a side hustle: Trading and Side Hustle examples.
I hope this clears things up and reassures anyone who makes the odd bit of money selling their old stuff that they’re not suddenly going to be taxed on it!
This post is not tax advice, please check with a professional if you are unsure of anything.
