Guidance

Selling online and paying taxes - information sheet

Updated 3 January 2024

If you regularly sell goods or services through an online marketplace, this activity could be treated as a ‘trade’ for UK tax purposes and you may have to pay tax on your profits.

You can use our online tool to check if you need to tell HMRC about additional income.

When you may need to pay tax for selling goods or services online

In order to pay tax on the goods or services you sell online, you either have to be trading or making a capital gain.

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.

If you buy goods for resale, or make goods with the intention of selling them for a profit, then you are likely to be trading and will have to pay tax on your profits.

However, if your total income from trading or providing services online was less than £1,000 (before deducting expenses) in any tax year, you would not be required to inform HMRC nor pay any tax on the profits (this is due to the Trading and Miscellaneous Income Allowance).

The examples below, while not exhaustive, cover a range of common scenarios of selling goods online, and illustrate where tax might need to be paid on any profits made.

Cash in the attic

Sally clears out her attic and decides to sell her unwanted items online. This is a one-off activity for Sally, and the items sold are for less or the same as the original purchase price.

As these are her personal possessions she is unlikely to be trading, but she was able to check the guidance on GOV.UK to find out if she needed to tell HMRC about the income.

Clothing reseller

After making some money from selling unwanted clothes, Josh begins to buy items from car boot sales and charity shops which he then sells through online marketplaces, aiming to sell for more than he paid for them.

Josh does this activity consistently, honing his skills of picking up items which he hopes to sell for a profit after fees and postage.

This is likely to be trading, and the profits would be taxable.

Selling home-made greeting cards

Gina works full time, and in her spare time she makes greetings cards for her family and friends.

Gina then begins to sell her cards online, and is soon making a profit. With business going well, she also expands the range of items that she sells.

Gina is selling with the intention of making a profit, and she is also organising her activities in a way which commercially-minded traders would do. Therefore, this is likely to be trading, and the profits would be taxable.

The model car collector

David collects model cars. He sometimes buys and sells them but also looks for swaps. The swaps are designed to complete sets which David knows will be more valuable as a set than as individuals. When he has a complete set, he offers it for sale, often at a sizeable profit.

As David is buying and selling models so he can make a profit, he is is likely to be classified as trading.

Importing cameras to sell

Steve imports cameras and accessories online from the Far East and he sells them online making a profit.

Steve is selling with the intention to make a profit, and he sells regularly, so he is likely to be classified as trading.

The online tutor

Avram is studying part time and working in a shop on the days he is not studying. In the evenings he offers language tuition online in exchange for money.

He carries out these activities frequently and has several students who are signed up to his regular classes upon which he offers a discount for bulk bookings.

The activity is organised, and Avram promotes his service through word of mouth. He is likely to be trading and any profits he makes would be subject to tax.

Information collected by online marketplaces

For tax, an ‘online marketplace’ is any digital platform (for example a website or mobile phone app) that handles and enables the sale of goods and services from individuals and/or businesses to customers.

From 1 January 2024, digital platforms are required to collect and report seller information and income to HMRC. These digital platforms must report sellers’ income by January 2025. 

The changes are an internationally agreed set of rules requiring digital platforms to report certain information to HMRC. 

If you sell goods or services on these platforms you will get a copy of this information. You can use this information to check the amount of income and expenses incurred through these platforms, which may be helpful in determining whether tax is due on any profits.

How to register to pay your tax through Self Assessment

If you’ve never declared income through a Self Assessment tax return, you find out how to register and how to file a return.

You can check what you owe and pay your Self Assessment bill via the HMRC App. Download it from the App Store for iOS or the Google Play Store for Android.