In broad terms, you are only liable to tax in these situations if you are trading. Selling off personal possessions is generally not trading (buying 5 ND555s off ebay and flogging them on for more might prove difficult to argue the personal possessions position). Tax is on trading profits not sales total. But if you did buy something at a car boot sale for 50p and sell it for £200k, Capital Gains Tax comes into play. A find clearing out parents attic may also trigger CGT - depends on probate value (not valued for probate may be awkward for inheritance tax and capital gains tax).
There has been no change to the tax laws. It is just that HMRC is going to be better informed about those who may not be paying taxes they owe. There is nothing new here, it is just an expansion of the information flow that HMRC has been getting from banks for ages and from food delivery franchisers, etc.
Some of the reporting has been poor. The experts tend to cover the ground but it then gets edited with critical bits left out.
I’m pretty sure the taxman will only be contacting people who they believe will find it very difficult to claim they are not a trader. They don’t have the resources to do otherwise.
Of course there will be a small percentage of people who virtually ‘Hand Themselves In’
If the automated data collection system operated by HMRC is run by Fujitsu and you’ve sold stuff on Ebay, whatever you do, don’t agree or sign any profit/loss submissions. I’ve been watching the telly recently and I’m pretty much up to scratch with contracts and agreements now.
That is what I would have expected but a word of warning - the latest Which article on this talks only about sales, nothing about deducting costs to get to profit, nothing about being a trader:
"*Let’s say you make £1,700 from selling your old clothes on the side and £30,000 in your job over the tax year 2023-24 (which runs from 6 April 2023 to 5 April 2024). *
You just need to add the two figures together to find out your total taxable income for the year (£31,700).
You can then deduct the £12,570 personal allowance (the amount of income you can earn before paying tax) and the £1,000 trading allowance relief.
*In this scenario, you pay tax at the basic rate (20% or 19% if you live in Scotland) on £18,130 of your income. *
In reality, as your employer will normally pay tax to HMRC on your income on your behalf you just need to worry about paying the basic rate tax owed on £700.
If your only income in 2023-24 was £1,700 from selling your old clothes, you wouldn’t pay any tax at all. That’s because the £700 income that exceeds the trading allowance does not exceed the £12,570 personal allowance. "
So if you sell your 552/500 on Ebay you might need a discussion with HMRC.
Yes, according the UK.GOV if you are a trader or sole trader selling goods or services … which is illustrated as
Selling goods or services
You could be classed as a trader if you sell goods or services. If you’re trading, you’re self-employed.
You’re likely to be trading if you:
sell regularly to make a profit
make items to sell for profit
sell items on a regular basis, either online, at car boot sales or through classified adverts
earn commission from selling goods for other people
are paid for a service you provide
But I agree the information provided is not as clear as it could be, and relies on nested references.
You are unlikely to be trading if you are selling your unwanted personal possessions, and then this does not apply. But there are exceptions with model car connector that is building their collection through swapping and selling… as that would be selling. I guess that could apply to collections of vintage hifi or records.
“*Let’s say you make £1,700 from selling your old clothes”
The key word is “Make” which normally signifies profit. “Take” is normally the word which signifies sales.
OK. These rules have been in place for years and years.
I wonder how many news stories, Private Eye investigations, Martin Lewis appeals or TV docu-dramas there have been about HMRC wrongly pursuing some Deirdre or Derek for selling off some of their posessions on ebay or perhaps raiding a car boot one murky Sunday morning, taking away a rail of children’s cardies and romper suits as evidence of profitable trading?
All that’s really changing is it will become incumbent on some trading sites/platforms to send data directly to HMRC instead of HMRC having to collect it. They will get millions and millions of bits of data sent to them as a result. Now I doubt they’ll have some kind of special investigations team set up to identify the potential extended levels of trading among HiFi or Vinyl resellers and come after you with a big hatchet. If they did, I’d like to know where they got the staff from as right now they can’t even man a telephone line.
I imagine they will, however, have some kind of AI system in place and I suppose that could go awry. I do though suspect if a few million online resellers suddenly get a tax demand for redistributing their old gear they will be directed to look again…Even if they don’t and they ‘find and pursue’ you, the trading rules above are a reasonable defence imo. However, if you’re really worried, I would suggest you just take pictures of all your stuff right now, which with a time and date stamp should serve as evidence of your innocence
