Ebay home screen
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Selling your old or unloved items on eBay can be a cathartic experience; you’re clearing out the clutter, making some extra money, and sending your stuff to a new and happy home.

What you may not be aware of, however, is that in some instances, the taxman will want to know what you’ve been getting up to on eBay, and might even want a slice of the pie.

But where do we draw the line? Does everyone who sells anything on eBay have to let HMRC know what they’re selling and how much they’re making, or is there a line beneath which you can continue selling your old stuff tax-free?

In this article, we’ll cover the so-called ‘eBay tax’, who needs to take it into consideration, and how to let HMRC know about your sales.

{{pt-self-assessment}}

Who needs to pay tax on eBay sales?

The main rule of thumb here is that if you’re using eBay with the explicit desire to make enough profit to live on, you’re going to need to let HMRC know what you’ve been getting up to and how much you’ve been making.

It’s usually very unlikely that the items people sell on eBay are going to turn a profit for them – unless you’re sitting on a well-aged gem, like original print Pokémon cards which can fetch up to $7.4m.

If you’re selling old games, books, and clothes, for example, you’re likely only making back a small fraction of what you originally bought them for.

If you’re selling brand new items as part of a business, and you consider them ‘stock’ rather than ‘clutter’, then you need to let HMRC know what you’ve earned.

What is eBay tax?

eBay tax is something of a shorthand term, simply to mean ‘tax you need to pay after selling things on selling pages’.

Remember, the key here to identify whether your aim is to make a profit on what you’re selling, or to provide the bulk of your monthly/yearly income.

Whether you’re selling on eBay, Vinted, Gumtree, Facebook Marketplace or otherwise, they’re all subject to the so-called ‘eBay tax’ if your goal is to turn a profit on the goods you’re selling.

Is there a limit to how much I can earn on eBay before I have to pay tax?

This is a slightly complicated question to answer; on the one hand, Trading Allowance rules enable you to earn up to £1,000 a year from your eBay sales completely tax-free. That’s a good baseline to keep in mind if you’re starting up your own eBay selling page.

Thing is, just by decluttering your house, you may tip yourself over the £1,000 mark while still not intending to make it a business. So, while £1,000 a year is a good number to have in mind, it’s by no means a definitive answer to the original question.

Don’t forget that the Trading Allowance is not the same as Personal Allowance – that’s the threshold below which the earnings from your full-time income are not subject to income tax deductions.

If you’re in any doubt as to whether your eBay earnings require HMRC to know what’s up, we’d recommend filling in a Self Assessment just to be sure. Better safe than sorry, right?

Do I need to pay Capital Gains Tax on eBay sales?

This one’s a little more clear-cut, thankfully.

If you’ve found something in your attic which has only gone and sold for a tasty £3,000 or more, you’ll need to pay Capital Gains Tax on it.

The only exception to this rule is if you sell your car on eBay; vehicles are subject to a different set of rules, which HMRC detail more on their gov.uk website.

Can I claim expenses on eBay sales?

As ever with expenses, if you’re planning on claiming them, you have to be able to prove that they were solely purchased for the benefit of your business venture.

You can claim things like your postage and eBay selling fees as expenses, as well as packing supplies such as tape and boxes or jiffy bags.

If you have any standalone equipment that you use to shoot high-quality photos your items – like a manikin for clothes or even a lighting rig for your photo area – you’ve got a good chance of claiming those as well. Just make sure you can prove they’re exclusively for business purposes if HMRC decide to take issue with your claim.

Do I need to pay VAT on eBay sales?

There’s a chance, but it’s fairly unlikely.

You’ll have to register for VAT if:

  • You earn over £85,000 from your self-employed venture (which you’re unlikely to achieve from eBay sales, though not impossible).
  • You want to reclaim VAT that you’ve paid on other purchases (such as any VAT you’ve paid on the camera you use to shoot your eBay pictures, for example).

If you’re earning £85,000+ a year from eBay sales, then you absolutely should be VAT-registered, and you should be filing yearly Self Assessments.

What if I don’t tell HRMC about my eBay sales?

Then you may very well get an unexpected and unpleasant call from the taxman.

It all boils down to whether HMRC believe that you’re actively trading and making a living off of your eBay sales, but that line gets blurry when you’re making a considerable amount of money.

If your eBay sales are encroaching on the £1,000 a year mark, you should definitely look at filing a Self Assessment just to be safe.

Don’t forget, all of your eBay records are digitally available to HMRC if they decide to go looking for them, so you might as well err on the side of caution.

How can Crunch help me?

If you’re looking to file a Self Assessment, Crunch have got your back!

All you need to do is choose a Crunch accountancy package, and you can start uploading digital backups of all your eBay sales, invoices, bank statements and more to our secure online platform. It doesn’t matter whether you’re on our free package or one of our paid tiers – you get access to the same online accounting platform, no matter which package you choose!

If you do decide to take up a paid package, you’ll also gain access to our in-house accounting experts. They can help you manage your books, keep you up to date on upcoming tax deadlines, and even complete and file your Self Assessment tax return on your behalf.

All you need to do is keep a record of your incomings and outgoings, and our experts take care of the rest!

For more information about Crunch’s accountancy packages, check out our Pricing page, or give one of our friendly Sales team a call for a free consultation.

guide cover for "8 great ways accountancy can help your ecommerce business"

Unlock your free ecommerce business guide!

Expert Insights
Actionable Tips
Strategic Advice

To receive our guide on valuable insights into the world of expenses for limited companies please submit your details below.

Please enjoy our guide on 8 Ways Great Accountancy Helps ecommerce Businesses Succeed.

Click below to download our PDF guide.
Oops! Something went wrong while submitting the form.

By submitting you are agreeing to be contacted by Crunch.

Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
Self Assessment tax returns done for you, from just £200 £130+VAT
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!
Share this post
Ross Bramble
Content Executive
Updated on
January 22, 2024

Knowledge Hubs

Take control of your accounts, today

Crunch’s effective software package includes being able to talk to an expert client manager and a Chartered Certified Accountant. You can count on Crunch to make you productive and profitable.
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Unlock Your Free Limited Company Expense Guide!

Expert Insights
Actionable Tips
Strategic Advice

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! June 27, 2024 1:30 PM
Dive into e-commerce basics
Expert industry insights
Practical tips and savvy tricks
Pro Tip
Looking for a dedicated accountant?

Our Enterprise packages offer tailored support for you and your business. You can focus on your business, we'll crunch the numbers.

Pro Tip
Boost your business finances with our Ltd Company packages!

Award-winning software with support from expert accountants

Pro Tip
Take the stress out of Sole Trader Accounting

Just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE

Pro Tip
Get 50% off your Self Assessment

Get your tax return sorted by experts for only £130+VAT!

Pro Tip
Using cloud-based accountancy software to manage your finances gives any small business a big advantage!

At Crunch we provide affordable cutting-edge, easy-to-use software with real human support from expert chartered accountants. That’s probably why 81% of our clients would recommend Crunch.

Pro Tip
Did you know - you have access to a Chartered Certified accountant for free on our paid subscriptions?

Book a call with our one accountants and get your questions answered. Just £25.50 +VAT for Crunch Free users.

Pro Tip
Get 35% off your Tax Return!

Crunch’s Self Assessment service provides an expert accountant to complete, check, and file your Self Assessment for you for just £130 +VAT.

Pro Tip
Did you know - We have a free plan that is great for sole traders and limited companies?

Why not see for yourself? It’s simple and easy to use and 100% free.