Money expert Martin Lewis has warned people who sell on websites like eBay and Vinted to be ‘extra careful’ after a change to the law.
The financial guru has urged people using selling sites that they are going to be automatically reported to HMRC from Friday.
The change follows a new international rule being introduced and it takes effect on Friday, January 31.
Although the laws on Income Tax have not changed, the It means that those websites will now automatically pass on information on what you’ve sold to the tax office.
Returning on The Martin Lewis Money Show Live on ITV1 and ITVX, Martin said: “Airbnb, eBay, Uber and Vinted and other websites which are similar have to share your earnings with HMRC due to an international rule change.
He said: “In January last year they had to start collecting data, by this Friday they have to start sharing it.”
Martin explained that there’s a threshold which if you pass, your data will be passed on.
He continued: “Now, they will pass on your data if you’re selling over 30 items or about £1,700 a year.
“But crucially the tax rules have not changed. Tax is only due for those who are traders, that is people who are deliberately buying stuff in order to sell it for a profit, or building and repairing it in order to sell it for a profit.
“Not, producer Alex who was telling me she cleared out her wardrobe and was worried. You cleared out your wardrobe it’s your stuff, you didn’t buy it for profit you’re absolutely fine.
“If you are trading – selling for profit – you can sell a maximum £1,000 a year of stuff including platform fees.
“Above that you are, and have always been, eligible to pay tax but now they’re reporting it so be extra careful.”
As Martin alluded to, the tax is only on those who are buying (or making) and selling for profit. If, for example, you bought a jacket for £100 and sold it two years later for £60 on eBay, there would be no tax to pay on that because you sold it for less than you bought it for and you’re not a trader running a business.
Because of the rule change, your information is now being passed on to HMRC, which may write to you to ask you to submit a self-assessment tax return if you took a lot of money selling online, and at this point you would submit an accurate summary of what you bought and sold and the profits (or not) made, and you would then pay any tax should you owe any.
If selling personal possessions, there is a £6,000 limit and anything you sell (other than cars and some exceptions) would not be liable to tax if sold under £6,000.
Explaining the law, eBay added: “In general, selling personal items is not taxed if they’re below £6,000 and you’re not selling as part of a business.
“So, you still won’t pay tax unless: You are ‘trading’ or buying and selling multiple items to try and make a profit or run a business.
“You sell an asset for more than £6,000 (the level where capital gains tax may apply).”
