Do you have to pay taxes for stuff you sell on Ebay?

Written by roger golden
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Do you have to pay taxes for stuff you sell on Ebay?
Online auctions allow you to sell items without getting out of bed. (Getty Thinkstock)

Whether or not you have to pay VAT on things you sell on eBay depends on your personal circumstances and just how much you are selling. According to HM Revenue and Customs, if you are "registered for VAT, you must charge VAT on all VAT taxable supplies of goods and services that you make. 'Supplies' include day-to-day sales as well as anything else that you sell or invoice for." However there are some exceptions.

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Business Vs. hobby

If you only place items up for sale on rare occasions then you probably won't have any problems with unclaimed income. HMRC clearly state that goods are deemed to be outside the scope of VAT when you "sell but not as part of your business - for example, if you occasionally receive income from sources such as leisure activities or hobbies."

Possible taxes

If you are a business in the UK and you are selling items on the UK then you may have to register as a VAT-registered business. This depends on a number of considerations, including the volume of your sales and how your online auction is managed. In order to establish this then you should determine if "at the end of any month, the value of your taxable supplies in the previous 12 months or less, is over the registration threshold." HMRC provide clear guidelines on their registration Website for this (see resources). If you are eligible for registration then you will do so as a sole proprietor, partnership, corporate body or club/association.

Capital Gains Tax

The amount and type of tax you should pay on your eBay earnings depends on how much you earn and how you earn it. HMRC provide clear guidelines to Captail Gains Tax on their Website (see references).

Costs and profits

Selling an item is not synonymous with earning a profit. For instance, an item that you purchased new for £48, if sold for the same amount or less, would not be considered a profit. Only if the item brings in more than you spent on the item, including repairs and handling costs, is there a profit that must be reported. Where the auction is being used as a business, selling items at less than your investment may even qualify for loss claims in your net income.


When in doubt you should consult a registered accountant. Under no circumstances should you be tempted to falsify tax information as this could result in civil fines and criminal prosecution under UK law.

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