Do you intend to make profit from buying and selling second-hand items? Or run a business selling goods via an online marketplace? If yes, accurately reporting and paying your tax is crucial. Always refer to official HMRC resources to check whether you are liable for taxes.
How many people will sell second-hand items in 2024?
Gumtree research* found the second-hand sector is set to boom in 2024. Because of rising living costs, more people than ever are leaning into the circular economy to top up funds.
- 39% of British people plan to make extra income from second-hand markets in 2024. However, this increases to 48% amongst Gen-Zs aged 18-26.
- The average amount people expect to make in 2024 from selling items second-hand is £562.16, But this jumps to £840.64 amongst those under 26.
- 14% of all people plan to make more than £1000 in 2024, increasing to 24% amongst Gen Z.
- Around the UK, those planning to make the most from second-hand selling live in Cardiff (£829), Edinburgh (£747), London (£718) and Birmingham (£673).
- 25% of people plan to buy preloved items they can improve and sell at a profit in 2024. While the figure increases to 40% amongst Gen Z.
- On average, British people plan to sell 2 second-hand items per month in 2024. However, this rises to 3.5 items for those under 35.
Do I need to pay tax on money made from selling items second-hand?
Crucially, if you are decluttering and selling unwanted personal items from around your home, it’s unlikely you will need to pay tax.
However, if you are buying and selling items to make a profit or if you receive a commission on goods sold for a third party, this can be deemed as trade and you could also be liable for capital gains tax.
The latest guidance on whether to report additional income and definitions of ‘trade’ can be found on the HM Revenue and Customs (HMRC) website.
Have tax rules changed for people using online marketplaces?
Tax rules for individuals selling their personal possessions online have not changed. However, HMRC has introduced a new obligation for market place websites to provide information about specific online sellers.
What is a side hustle?
Simply put, a side hustle is an income stream from outside your primary employment. Different from an additional part-time job, a side hustle is often borne out of a passion and offers flexibility to fit around your other commitments. Side hustles can range from selling second-hand clothes for profit to an entire new business.
What are the new ‘side hustle tax rules’?
Recently, HMRC signed up to the Organisation for Economic Co-operation and Development (OECD) rules to tighten control on tax evasion. The implementation allows HMRC to exchange information with other tax authorities to quickly and efficiently access data from platforms outside the UK.
Informally referred to as ‘side hustle tax rules,’ the rules are intended to make it easier for sellers on digital platforms to comply and help HMRC to detect and tackle tax evasion when they do not.
New reporting rules were introduced for digital platforms from 1 January 2024. The rules require platforms to report information about the income of sellers providing goods and services to help sellers get their tax right and to enable HMRC to detect and tackle non-compliance.
Do I need to pay tax on my side hustle?
If your annual gross property income is £1,000 or less, from one or more property businesses you will not have to tell HMRC or declare this income on a tax return. You may be required to complete a tax return for other income.
The trading allowance is in addition to your tax-free personal allowance.
If you’re earning more than £1,000 from your side hustle and are above your personal allowance in a tax year, you will need to pay tax. This will require you to submit a self-assessment tax return via HMRC.
However, if you are buying and selling to make a profit, this can be deemed as trade. For example, snapping up old furniture at boot fairs and revamping items to sell them on. It is your responsibility to check whether you need tax on second-hand items you are selling.
How do I work out whether I need to pay tax on second-hand sales?
Always refer to the official HMRC website for advice. The site includes guidance on what activity is classed as ‘trade’. Additionally, resources such as self-assessment tools to help work out what tax you might need to pay.
*Research conducted by CensusWide on behalf of Gumtree across 2,004 Nationally Representative Consumers aged 18+ between 17th – 20th November 2023.
