Are You Selling On EBay, Vinted, Or Depop? Know Your HMRC Obligations

Axel S�rensen

5 min read

Post on May 20, 2025

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Determining Your Tax Threshold

What income level triggers tax liability?

As an online seller on platforms like eBay, Vinted, or Depop, it's vital to understand when your earnings become subject to UK tax. The key is knowing the difference between your personal allowance and taxable income. Your personal allowance is the amount you can earn each year before you start paying income tax. For the tax year 2023-24, this is £12,570. Any income you earn above this threshold is considered taxable income.

For example:

• Scenario 1: If you earn £5,000 selling items on Vinted, you are well below the personal allowance and owe no income tax on these earnings.

• Scenario 2: If you earn £15,000 selling on eBay and Depop combined, £2,430 (£15,000 - £12,570) is your taxable income. This falls into the basic rate tax band, meaning you'll pay income tax at 20% on this amount.

• Scenario 3: You might have other income sources, like employment, alongside your online selling profits. Your total income from all sources will determine your overall tax liability. HMRC will consider all sources of income when calculating your tax owed.

• Bullet Points:

  • Personal Allowance 2023-24: £12,570 (This amount may change, always check the official HMRC website for the most up-to-date information).
  • Tax bands: Income tax in the UK is tiered, with different rates applied to different income levels (basic rate, higher rate, additional rate). Check the HMRC website for the current rates.

Record Keeping for Online Sellers

Importance of accurate record keeping for HMRC

Accurate record-keeping is paramount for any online seller, regardless of whether you're using eBay, Vinted, Depop, or other platforms. Maintaining detailed transaction records is not just good practice; it's a legal requirement for complying with UK tax law. These records are essential when filing your Self-Assessment tax return. Failing to keep accurate records can lead to significant penalties from HMRC.

• Bullet Points:
  • Record-keeping methods: Use spreadsheets, accounting software (like Xero or FreeAgent), or dedicated online selling accounting tools to track your sales and expenses.
  • Information to include: For each transaction, record the date, item sold, selling price, platform fees (eBay, Vinted, Depop fees), shipping costs, and any other relevant details.
  • Receipts: Keep all receipts for expenses, such as packaging materials, postage, advertising costs (for example, promoting your items on social media), and any other business-related outgoings.

Allowable Expenses When Selling Online

Deducting expenses from your profits

When calculating your taxable profit from online selling, you can deduct certain allowable expenses. This reduces your taxable income and, therefore, your tax liability.

• Examples of deductible expenses:

  • Packaging materials: Boxes, envelopes, bubble wrap, etc.
  • Postage and shipping: Costs associated with sending items to buyers.
  • Advertising fees: Costs incurred to promote your items (social media ads, listing fees beyond basic platform fees, etc.).
  • Website or online store fees: If you have a separate website or online store to sell your items.
  • Accountancy fees: Costs associated with preparing your tax return.
  • Photography equipment and services: Costs related to taking high-quality photos of your items for sale.

• What is not deductible: Personal expenses, such as your internet bill (unless used exclusively for business), or general household expenses, are not deductible.

• Bullet Points:

  • Detailed examples: Keep detailed records of each expense with receipts to support your claims.
  • The "solely and exclusively" rule: Expenses must be incurred solely and exclusively for the purpose of your online selling business to be deductible.
  • HMRC guidance: Refer to the HMRC website for detailed guidance on allowable expenses for self-employed individuals. [Link to relevant HMRC guidance]

Choosing the Right Tax Method

Self-Assessment vs. other methods

If your online selling income exceeds your personal allowance, you'll likely need to complete a Self-Assessment tax return. This is an annual declaration of your income and expenses to HMRC. Registering as self-employed is typically required if your online selling activity is considered a business rather than a casual hobby.

• Bullet Points:
  • Self-Assessment deadlines: The deadline for submitting your Self-Assessment tax return is typically 31 January following the end of the tax year (6 April).
  • HMRC online services: Use HMRC's online services to file your tax return and manage your tax affairs efficiently. [Link to HMRC online services]
  • Tax code: Your tax code determines how much income tax is deducted from your earnings. Understand how this applies to your online selling income.

Conclusion

Selling on platforms like eBay, Vinted, and Depop can be profitable, but it’s vital to understand your HMRC obligations. Accurate record-keeping and understanding allowable expenses are key to minimizing your tax liability. If your online selling income exceeds your personal allowance, you'll need to file a Self-Assessment tax return.

Call to Action: Don't risk penalties! Take control of your online selling finances and ensure you're compliant. Learn more about your HMRC obligations related to eBay, Vinted, and Depop selling today. Visit the HMRC website for comprehensive guidance or seek professional advice from a qualified accountant. Understanding your HMRC obligations when selling online is crucial for long-term success.